Correlation Between Cielo SA and CCC Intelligent

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

By analyzing existing cross correlation between Cielo SA and CCC Intelligent Solutions, you can compare the effects of market volatilities on Cielo SA and CCC Intelligent 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 Cielo SA with a short position of CCC Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cielo SA and CCC Intelligent.

Diversification Opportunities for Cielo SA and CCC Intelligent

-0.78

Correlation Coefficient

Cielo SA  CCC Intelligent

Pay attention - limited upside

The 3 months correlation between Cielo and CCC is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cielo SA and CCC Intelligent Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCC Intelligent Solutions and Cielo SA 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 Cielo SA are associated (or correlated) with CCC Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCC Intelligent Solutions has no effect on the direction of Cielo SA i.e., Cielo SA and CCC Intelligent go up and down completely randomly.

Pair Corralation between Cielo SA and CCC Intelligent

Assuming the 90 days horizon Cielo SA is expected to generate 11.47 times more return on investment than CCC Intelligent. However, Cielo SA is 11.47 times more volatile than CCC Intelligent Solutions. It trades about 0.4 of its potential returns per unit of risk. CCC Intelligent Solutions is currently generating about 0.21 per unit of risk. If you would invest  51.00  in Cielo SA on September 3, 2024 and sell it today you would earn a total of  33.00  from holding Cielo SA or generate 64.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	15.63%
Values	Daily Returns

Cielo SA  vs.  CCC Intelligent Solutions

Cielo SA

Risk-Adjusted Performance

0 of 100

Very Strong

Over the last 90 days Cielo SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain basic indicators, Cielo SA showed solid returns over the last few months and may actually be approaching a breakup point.

CCC Intelligent Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CCC Intelligent Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, CCC Intelligent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cielo SA and CCC Intelligent

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

The idea behind Cielo SA and CCC Intelligent Solutions 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.