Correlation Between Cibl and New Wave

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

By analyzing existing cross correlation between Cibl Inc and New Wave Holdings, you can compare the effects of market volatilities on Cibl and New Wave 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 Cibl with a short position of New Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cibl and New Wave.

Diversification Opportunities for Cibl and New Wave

0.21

Correlation Coefficient

Cibl  New Wave

Modest diversification

The 3 months correlation between Cibl and New is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cibl Inc and New Wave Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Wave Holdings and Cibl 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 Cibl Inc are associated (or correlated) with New Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Wave Holdings has no effect on the direction of Cibl i.e., Cibl and New Wave go up and down completely randomly.

Pair Corralation between Cibl and New Wave

Given the investment horizon of 90 days Cibl Inc is expected to under-perform the New Wave. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cibl Inc is 10.17 times less risky than New Wave. The pink sheet trades about -0.01 of its potential returns per unit of risk. The New Wave Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.32  in New Wave Holdings on October 10, 2024 and sell it today you would lose (0.22) from holding New Wave Holdings or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Cibl Inc  vs.  New Wave Holdings

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

New Wave Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in New Wave Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Wave reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cibl and New Wave

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

The idea behind Cibl Inc and New Wave 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.