Correlation Between CHAODA MODERN and Cass Information

Can any of the company-specific risk be diversified away by investing in both CHAODA MODERN and Cass Information 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 CHAODA MODERN and Cass Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHAODA MODERN AGRI and Cass Information Systems, you can compare the effects of market volatilities on CHAODA MODERN and Cass Information 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 CHAODA MODERN with a short position of Cass Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAODA MODERN and Cass Information.

Diversification Opportunities for CHAODA MODERN and Cass Information

-0.59

Correlation Coefficient

CHAODA MODERN  Cass Information

Excellent diversification

The 3 months correlation between CHAODA and Cass is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding CHAODA MODERN AGRI and Cass Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cass Information Systems and CHAODA MODERN 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 CHAODA MODERN AGRI are associated (or correlated) with Cass Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cass Information Systems has no effect on the direction of CHAODA MODERN i.e., CHAODA MODERN and Cass Information go up and down completely randomly.

Pair Corralation between CHAODA MODERN and Cass Information

Assuming the 90 days trading horizon CHAODA MODERN AGRI is expected to generate 6.8 times more return on investment than Cass Information. However, CHAODA MODERN is 6.8 times more volatile than Cass Information Systems. It trades about 0.04 of its potential returns per unit of risk. Cass Information Systems is currently generating about 0.0 per unit of risk. If you would invest  6.00  in CHAODA MODERN AGRI on October 10, 2024 and sell it today you would lose (4.00) from holding CHAODA MODERN AGRI or give up 66.67% of portfolio value over 90 days.

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

CHAODA MODERN AGRI  vs.  Cass Information Systems

CHAODA MODERN AGRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAODA MODERN AGRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cass Information Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CHAODA MODERN and Cass Information

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

The idea behind CHAODA MODERN AGRI and Cass Information Systems 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.