Correlation Between COMBA TELECOM and Select Energy

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

By analyzing existing cross correlation between COMBA TELECOM SYST and Select Energy Services, you can compare the effects of market volatilities on COMBA TELECOM and Select Energy 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 COMBA TELECOM with a short position of Select Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMBA TELECOM and Select Energy.

Diversification Opportunities for COMBA TELECOM and Select Energy

-0.24

Correlation Coefficient

COMBA TELECOM  Select Energy

Very good diversification

The 3 months correlation between COMBA and Select is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Select Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Energy Services and COMBA TELECOM 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 COMBA TELECOM SYST are associated (or correlated) with Select Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Energy Services has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and Select Energy go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Select Energy

Assuming the 90 days trading horizon COMBA TELECOM is expected to generate 15.03 times less return on investment than Select Energy. But when comparing it to its historical volatility, COMBA TELECOM SYST is 1.14 times less risky than Select Energy. It trades about 0.0 of its potential returns per unit of risk. Select Energy Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  746.00  in Select Energy Services on October 13, 2024 and sell it today you would earn a total of  559.00  from holding Select Energy Services or generate 74.93% return on investment over 90 days.

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

COMBA TELECOM SYST  vs.  Select Energy Services

COMBA TELECOM SYST

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COMBA TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Select Energy Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Select Energy Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Select Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMBA TELECOM and Select Energy

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

The idea behind COMBA TELECOM SYST and Select Energy Services 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.