Correlation Between CK Power and Central Retail

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

By analyzing existing cross correlation between CK Power Public and Central Retail, you can compare the effects of market volatilities on CK Power and Central Retail 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 CK Power with a short position of Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and Central Retail.

Diversification Opportunities for CK Power and Central Retail

0.22

Correlation Coefficient

CK Power  Central Retail

Modest diversification

The 3 months correlation between CKP and Central is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and CK Power 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 CK Power Public are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of CK Power i.e., CK Power and Central Retail go up and down completely randomly.

Pair Corralation between CK Power and Central Retail

Assuming the 90 days trading horizon CK Power Public is expected to under-perform the Central Retail. But the stock apears to be less risky and, when comparing its historical volatility, CK Power Public is 1.24 times less risky than Central Retail. The stock trades about -0.33 of its potential returns per unit of risk. The Central Retail is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,125  in Central Retail on August 30, 2024 and sell it today you would earn a total of  275.00  from holding Central Retail or generate 8.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

CK Power Public  vs.  Central Retail

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Central Retail

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Central Retail disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CK Power and Central Retail

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

The idea behind CK Power Public and Central Retail 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.