Correlation Between CMC Corp and Ba Ria

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

By analyzing existing cross correlation between CMC Corp and Ba Ria Thermal, you can compare the effects of market volatilities on CMC Corp and Ba Ria 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 CMC Corp with a short position of Ba Ria. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMC Corp and Ba Ria.

Diversification Opportunities for CMC Corp and Ba Ria

-0.41

Correlation Coefficient

CMC Corp  Ba Ria

Very good diversification

The 3 months correlation between CMC and BTP is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CMC Corp and Ba Ria Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ba Ria Thermal and CMC Corp 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 CMC Corp are associated (or correlated) with Ba Ria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ba Ria Thermal has no effect on the direction of CMC Corp i.e., CMC Corp and Ba Ria go up and down completely randomly.

Pair Corralation between CMC Corp and Ba Ria

Assuming the 90 days trading horizon CMC Corp is expected to under-perform the Ba Ria. In addition to that, CMC Corp is 5.51 times more volatile than Ba Ria Thermal. It trades about -0.23 of its total potential returns per unit of risk. Ba Ria Thermal is currently generating about 0.4 per unit of volatility. If you would invest  1,150,000  in Ba Ria Thermal on October 6, 2024 and sell it today you would earn a total of  50,000  from holding Ba Ria Thermal or generate 4.35% return on investment over 90 days.

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

CMC Corp  vs.  Ba Ria Thermal

CMC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CMC Corp and Ba Ria

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

The idea behind CMC Corp and Ba Ria Thermal 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..