Correlation Between Cinis Fertilizer and Investment

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

By analyzing existing cross correlation between Cinis Fertilizer AB and Investment AB Oresund, you can compare the effects of market volatilities on Cinis Fertilizer and 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 Cinis Fertilizer with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cinis Fertilizer and Investment.

Diversification Opportunities for Cinis Fertilizer and Investment

0.73

Correlation Coefficient

Cinis Fertilizer  Investment

Poor diversification

The 3 months correlation between Cinis and Investment is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cinis Fertilizer AB and Investment AB Oresund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment AB Oresund and Cinis Fertilizer 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 Cinis Fertilizer AB are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment AB Oresund has no effect on the direction of Cinis Fertilizer i.e., Cinis Fertilizer and Investment go up and down completely randomly.

Pair Corralation between Cinis Fertilizer and Investment

Assuming the 90 days trading horizon Cinis Fertilizer AB is expected to under-perform the Investment. In addition to that, Cinis Fertilizer is 3.56 times more volatile than Investment AB Oresund. It trades about -0.11 of its total potential returns per unit of risk. Investment AB Oresund is currently generating about -0.06 per unit of volatility. If you would invest  11,828  in Investment AB Oresund on September 3, 2024 and sell it today you would lose (668.00) from holding Investment AB Oresund or give up 5.65% of portfolio value over 90 days.

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

Cinis Fertilizer AB  vs.  Investment AB Oresund

Cinis Fertilizer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cinis Fertilizer AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Investment AB Oresund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investment AB Oresund has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cinis Fertilizer and Investment

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

The idea behind Cinis Fertilizer AB and Investment AB Oresund 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 Global Correlations module to find global opportunities by holding instruments from different markets.