Correlation Between COMBA TELECOM and Collins Foods

Can any of the company-specific risk be diversified away by investing in both COMBA TELECOM and Collins Foods 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 Collins Foods 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 Collins Foods Limited, you can compare the effects of market volatilities on COMBA TELECOM and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMBA TELECOM and Collins Foods.

Diversification Opportunities for COMBA TELECOM and Collins Foods

-0.09

Correlation Coefficient

COMBA TELECOM  Collins Foods

Good diversification

The 3 months correlation between COMBA and Collins is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Collins Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods Limited 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods Limited has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and Collins Foods go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Collins Foods

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to under-perform the Collins Foods. But the stock apears to be less risky and, when comparing its historical volatility, COMBA TELECOM SYST is 1.17 times less risky than Collins Foods. The stock trades about -0.07 of its potential returns per unit of risk. The Collins Foods Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  448.00  in Collins Foods Limited on September 4, 2024 and sell it today you would earn a total of  77.00  from holding Collins Foods Limited or generate 17.19% 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.  Collins Foods Limited

COMBA TELECOM SYST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMBA TELECOM SYST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Collins Foods Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Collins Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COMBA TELECOM and Collins Foods

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

The idea behind COMBA TELECOM SYST and Collins Foods Limited 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.