Correlation Between CIM FINANCIAL and FINCORP INVESTMENT

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

By analyzing existing cross correlation between CIM FINANCIAL SERVICES and FINCORP INVESTMENT LTD, you can compare the effects of market volatilities on CIM FINANCIAL and FINCORP INVESTMENT 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 CIM FINANCIAL with a short position of FINCORP INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIM FINANCIAL and FINCORP INVESTMENT.

Diversification Opportunities for CIM FINANCIAL and FINCORP INVESTMENT

0.23

Correlation Coefficient

CIM FINANCIAL  FINCORP INVESTMENT

Modest diversification

The 3 months correlation between CIM and FINCORP is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and FINCORP INVESTMENT LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FINCORP INVESTMENT LTD and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with FINCORP INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FINCORP INVESTMENT LTD has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and FINCORP INVESTMENT go up and down completely randomly.

Pair Corralation between CIM FINANCIAL and FINCORP INVESTMENT

Assuming the 90 days trading horizon CIM FINANCIAL SERVICES is expected to generate 0.84 times more return on investment than FINCORP INVESTMENT. However, CIM FINANCIAL SERVICES is 1.2 times less risky than FINCORP INVESTMENT. It trades about 0.15 of its potential returns per unit of risk. FINCORP INVESTMENT LTD is currently generating about 0.12 per unit of risk. If you would invest  1,400  in CIM FINANCIAL SERVICES on December 30, 2024 and sell it today you would earn a total of  200.00  from holding CIM FINANCIAL SERVICES or generate 14.29% return on investment over 90 days.

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

CIM FINANCIAL SERVICES  vs.  FINCORP INVESTMENT LTD

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, CIM FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

FINCORP INVESTMENT LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FINCORP INVESTMENT LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, FINCORP INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CIM FINANCIAL and FINCORP INVESTMENT

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

The idea behind CIM FINANCIAL SERVICES and FINCORP INVESTMENT LTD 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.