Correlation Between CiT and AuthID

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

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

Diversification Opportunities for CiT and AuthID

0.09

Correlation Coefficient

CiT  AuthID

Significant diversification

The 3 months correlation between CiT and AuthID is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and authID Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on authID Inc and CiT 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 CiT Inc are associated (or correlated) with AuthID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of authID Inc has no effect on the direction of CiT i.e., CiT and AuthID go up and down completely randomly.

Pair Corralation between CiT and AuthID

Given the investment horizon of 90 days CiT is expected to generate 2.68 times less return on investment than AuthID. But when comparing it to its historical volatility, CiT Inc is 2.67 times less risky than AuthID. It trades about 0.03 of its potential returns per unit of risk. authID Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  639.00  in authID Inc on December 28, 2024 and sell it today you would lose (7.00) from holding authID Inc or give up 1.1% of portfolio value over 90 days.

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

CiT Inc  vs.  authID Inc

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

authID Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in authID Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, AuthID may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CiT and AuthID

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

The idea behind CiT Inc and authID Inc 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.