Correlation Between C I and INTERNATIONAL BREWERIES

Can any of the company-specific risk be diversified away by investing in both C I and INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES PLC, you can compare the effects of market volatilities on C I and INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and INTERNATIONAL BREWERIES.

Diversification Opportunities for C I and INTERNATIONAL BREWERIES

0.45

Correlation Coefficient

C I  INTERNATIONAL BREWERIES

Very weak diversification

The 3 months correlation between CILEASING and INTERNATIONAL is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding C I LEASING and INTERNATIONAL BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTERNATIONAL BREWERIES has no effect on the direction of C I i.e., C I and INTERNATIONAL BREWERIES go up and down completely randomly.

Pair Corralation between C I and INTERNATIONAL BREWERIES

Assuming the 90 days trading horizon C I is expected to generate 1.09 times less return on investment than INTERNATIONAL BREWERIES. In addition to that, C I is 1.09 times more volatile than INTERNATIONAL BREWERIES PLC. It trades about 0.03 of its total potential returns per unit of risk. INTERNATIONAL BREWERIES PLC is currently generating about 0.04 per unit of volatility. If you would invest  375.00  in INTERNATIONAL BREWERIES PLC on October 21, 2024 and sell it today you would earn a total of  165.00  from holding INTERNATIONAL BREWERIES PLC or generate 44.0% return on investment over 90 days.

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

C I LEASING  vs.  INTERNATIONAL BREWERIES PLC

C I LEASING

Risk-Adjusted Performance

7 of 100

OK

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

INTERNATIONAL BREWERIES

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INTERNATIONAL BREWERIES PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, INTERNATIONAL BREWERIES showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C I and INTERNATIONAL BREWERIES

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

The idea behind C I LEASING and INTERNATIONAL BREWERIES 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.