Correlation Between CNDB Old and TransAKT

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

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

Diversification Opportunities for CNDB Old and TransAKT

-0.06

Correlation Coefficient

CNDB Old  TransAKT

Good diversification

The 3 months correlation between CNDB and TransAKT is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding CNDB Old and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT and CNDB Old 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 CNDB Old are associated (or correlated) with TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of CNDB Old i.e., CNDB Old and TransAKT go up and down completely randomly.

Pair Corralation between CNDB Old and TransAKT

If you would invest  2.77  in TransAKT on October 9, 2024 and sell it today you would lose (2.50) from holding TransAKT or give up 90.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

CNDB Old  vs.  TransAKT

CNDB Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNDB Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, CNDB Old is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

TransAKT

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNDB Old and TransAKT

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

The idea behind CNDB Old and TransAKT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.