Correlation Between CiT and Core Main

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

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

Diversification Opportunities for CiT and Core Main

0.26

Correlation Coefficient

CiT  Core Main

Modest diversification

The 3 months correlation between CiT and Core is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and Core Main in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Main 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 Core Main. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Main has no effect on the direction of CiT i.e., CiT and Core Main go up and down completely randomly.

Pair Corralation between CiT and Core Main

Given the investment horizon of 90 days CiT Inc is expected to generate 1.43 times more return on investment than Core Main. However, CiT is 1.43 times more volatile than Core Main. It trades about 0.03 of its potential returns per unit of risk. Core Main is currently generating about -0.03 per unit of risk. If you would invest  613.00  in CiT Inc on December 26, 2024 and sell it today you would earn a total of  20.00  from holding CiT Inc or generate 3.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

CiT Inc  vs.  Core Main

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.

Core Main

Risk-Adjusted Performance

Very Weak

Over the last 90 days Core Main has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Core Main is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CiT and Core Main

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

The idea behind CiT Inc and Core Main 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.