Correlation Between Cgrowth Capital and Caf Serendipity

Can any of the company-specific risk be diversified away by investing in both Cgrowth Capital and Caf Serendipity at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cgrowth Capital and Caf Serendipity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cgrowth Capital and Caf Serendipity Holdings, you can compare the effects of market volatilities on Cgrowth Capital and Caf Serendipity and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cgrowth Capital with a short position of Caf Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cgrowth Capital and Caf Serendipity.

Diversification Opportunities for Cgrowth Capital and Caf Serendipity

-0.43

Correlation Coefficient

Cgrowth Capital  Caf Serendipity

Very good diversification

The 3 months correlation between Cgrowth and Caf is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Cgrowth Capital and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Cgrowth Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cgrowth Capital are associated (or correlated) with Caf Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Cgrowth Capital i.e., Cgrowth Capital and Caf Serendipity go up and down completely randomly.

Pair Corralation between Cgrowth Capital and Caf Serendipity

Given the investment horizon of 90 days Cgrowth Capital is expected to generate 1.75 times more return on investment than Caf Serendipity. However, Cgrowth Capital is 1.75 times more volatile than Caf Serendipity Holdings. It trades about 0.08 of its potential returns per unit of risk. Caf Serendipity Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.30  in Cgrowth Capital on September 17, 2024 and sell it today you would lose (0.10) from holding Cgrowth Capital or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cgrowth Capital  vs.  Caf Serendipity Holdings

Cgrowth Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cgrowth Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Cgrowth Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Caf Serendipity Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caf Serendipity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady technical and fundamental indicators, Caf Serendipity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cgrowth Capital and Caf Serendipity

The main advantage of trading using opposite Cgrowth Capital and Caf Serendipity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cgrowth Capital position performs unexpectedly, Caf Serendipity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Caf Serendipity will offset losses from the drop in Caf Serendipity's long position.

The idea behind Cgrowth Capital and Caf Serendipity Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..