Correlation Between Collins Foods and Caravel Minerals

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

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

Diversification Opportunities for Collins Foods and Caravel Minerals

-0.46

Correlation Coefficient

Collins Foods  Caravel Minerals

Very good diversification

The 3 months correlation between Collins and Caravel is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Caravel Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravel Minerals and Collins Foods 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 Collins Foods are associated (or correlated) with Caravel Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravel Minerals has no effect on the direction of Collins Foods i.e., Collins Foods and Caravel Minerals go up and down completely randomly.

Pair Corralation between Collins Foods and Caravel Minerals

Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Caravel Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 2.78 times less risky than Caravel Minerals. The stock trades about 0.0 of its potential returns per unit of risk. The Caravel Minerals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Caravel Minerals on October 10, 2024 and sell it today you would lose (4.00) from holding Caravel Minerals or give up 17.39% of portfolio value over 90 days.

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

Collins Foods  vs.  Caravel Minerals

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Caravel Minerals

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caravel Minerals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caravel Minerals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Collins Foods and Caravel Minerals

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

The idea behind Collins Foods and Caravel Minerals 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.