Correlation Between Cintas and LABOCANNA

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

By analyzing existing cross correlation between Cintas and LABOCANNA SA ZY 10, you can compare the effects of market volatilities on Cintas and LABOCANNA 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 Cintas with a short position of LABOCANNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and LABOCANNA.

Diversification Opportunities for Cintas and LABOCANNA

0.38

Correlation Coefficient

Cintas  LABOCANNA

Weak diversification

The 3 months correlation between Cintas and LABOCANNA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and LABOCANNA SA ZY 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LABOCANNA SA ZY and Cintas 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 Cintas are associated (or correlated) with LABOCANNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LABOCANNA SA ZY has no effect on the direction of Cintas i.e., Cintas and LABOCANNA go up and down completely randomly.

Pair Corralation between Cintas and LABOCANNA

Assuming the 90 days horizon Cintas is expected to generate 23.1 times less return on investment than LABOCANNA. But when comparing it to its historical volatility, Cintas is 3.13 times less risky than LABOCANNA. It trades about 0.01 of its potential returns per unit of risk. LABOCANNA SA ZY 10 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  5.14  in LABOCANNA SA ZY 10 on December 21, 2024 and sell it today you would earn a total of  1.06  from holding LABOCANNA SA ZY 10 or generate 20.62% return on investment over 90 days.

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

Cintas  vs.  LABOCANNA SA ZY 10

Cintas

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cintas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cintas is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LABOCANNA SA ZY

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LABOCANNA SA ZY 10 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LABOCANNA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cintas and LABOCANNA

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

The idea behind Cintas and LABOCANNA SA ZY 10 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.