Correlation Between CNL Capital and Alpha Trust

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

By analyzing existing cross correlation between CNL Capital EKES AIFM and Alpha Trust Andromeda, you can compare the effects of market volatilities on CNL Capital and Alpha Trust 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 CNL Capital with a short position of Alpha Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNL Capital and Alpha Trust.

Diversification Opportunities for CNL Capital and Alpha Trust

-0.53

Correlation Coefficient

CNL Capital  Alpha Trust

Excellent diversification

The 3 months correlation between CNL and Alpha is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CNL Capital EKES AIFM and Alpha Trust Andromeda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Trust Andromeda and CNL Capital 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 CNL Capital EKES AIFM are associated (or correlated) with Alpha Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Trust Andromeda has no effect on the direction of CNL Capital i.e., CNL Capital and Alpha Trust go up and down completely randomly.

Pair Corralation between CNL Capital and Alpha Trust

Assuming the 90 days trading horizon CNL Capital EKES AIFM is expected to under-perform the Alpha Trust. In addition to that, CNL Capital is 1.1 times more volatile than Alpha Trust Andromeda. It trades about -0.06 of its total potential returns per unit of risk. Alpha Trust Andromeda is currently generating about 0.13 per unit of volatility. If you would invest  636.00  in Alpha Trust Andromeda on December 30, 2024 and sell it today you would earn a total of  36.00  from holding Alpha Trust Andromeda or generate 5.66% return on investment over 90 days.

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

CNL Capital EKES AIFM  vs.  Alpha Trust Andromeda

CNL Capital EKES

Risk-Adjusted Performance

Very Weak

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

Alpha Trust Andromeda

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Andromeda are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CNL Capital and Alpha Trust

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

The idea behind CNL Capital EKES AIFM and Alpha Trust Andromeda 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.