Correlation Between C I and GUINEA INSURANCE

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

By analyzing existing cross correlation between C I LEASING and GUINEA INSURANCE PLC, you can compare the effects of market volatilities on C I and GUINEA INSURANCE 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 C I with a short position of GUINEA INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and GUINEA INSURANCE.

Diversification Opportunities for C I and GUINEA INSURANCE

0.37

Correlation Coefficient

C I  GUINEA INSURANCE

Weak diversification

The 3 months correlation between CILEASING and GUINEA is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding C I LEASING and GUINEA INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUINEA INSURANCE PLC and C I 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 C I LEASING are associated (or correlated) with GUINEA INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUINEA INSURANCE PLC has no effect on the direction of C I i.e., C I and GUINEA INSURANCE go up and down completely randomly.

Pair Corralation between C I and GUINEA INSURANCE

Assuming the 90 days trading horizon C I LEASING is expected to under-perform the GUINEA INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, C I LEASING is 1.38 times less risky than GUINEA INSURANCE. The stock trades about -0.02 of its potential returns per unit of risk. The GUINEA INSURANCE PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  51.00  in GUINEA INSURANCE PLC on December 2, 2024 and sell it today you would earn a total of  13.00  from holding GUINEA INSURANCE PLC or generate 25.49% return on investment over 90 days.

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

C I LEASING  vs.  GUINEA INSURANCE PLC

C I LEASING

Risk-Adjusted Performance

Very Weak

Over the last 90 days C I LEASING has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, C I is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

GUINEA INSURANCE PLC

Risk-Adjusted Performance

OK

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

Pair Trading with C I and GUINEA INSURANCE

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

The idea behind C I LEASING and GUINEA INSURANCE PLC 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.