Correlation Between Cgrowth Capital and Imperial Res

Can any of the company-specific risk be diversified away by investing in both Cgrowth Capital and Imperial Res 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 Imperial Res into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cgrowth Capital and Imperial Res, you can compare the effects of market volatilities on Cgrowth Capital and Imperial Res 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 Imperial Res. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cgrowth Capital and Imperial Res.

Diversification Opportunities for Cgrowth Capital and Imperial Res

0.15

Correlation Coefficient

Cgrowth Capital  Imperial Res

Average diversification

The 3 months correlation between Cgrowth and Imperial is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cgrowth Capital and Imperial Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Res 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 Imperial Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Res has no effect on the direction of Cgrowth Capital i.e., Cgrowth Capital and Imperial Res go up and down completely randomly.

Pair Corralation between Cgrowth Capital and Imperial Res

Given the investment horizon of 90 days Cgrowth Capital is expected to generate 1.05 times more return on investment than Imperial Res. However, Cgrowth Capital is 1.05 times more volatile than Imperial Res. It trades about 0.13 of its potential returns per unit of risk. Imperial Res is currently generating about 0.09 per unit of risk. If you would invest  0.20  in Cgrowth Capital on September 12, 2024 and sell it today you would earn a total of  0.10  from holding Cgrowth Capital or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Cgrowth Capital  vs.  Imperial Res

Cgrowth Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cgrowth Capital are ranked lower than 10 (%) 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.

Imperial Res

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Imperial Res are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Imperial Res exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cgrowth Capital and Imperial Res

The main advantage of trading using opposite Cgrowth Capital and Imperial Res positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cgrowth Capital position performs unexpectedly, Imperial Res 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 Imperial Res will offset losses from the drop in Imperial Res' long position.

The idea behind Cgrowth Capital and Imperial Res 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.