Correlation Between COG Financial and SG Fleet

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

By analyzing existing cross correlation between COG Financial Services and SG Fleet Group, you can compare the effects of market volatilities on COG Financial and SG Fleet 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 COG Financial with a short position of SG Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of COG Financial and SG Fleet.

Diversification Opportunities for COG Financial and SG Fleet

-0.29

Correlation Coefficient

COG Financial  SG Fleet

Very good diversification

The 3 months correlation between COG and SGF is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding COG Financial Services and SG Fleet Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SG Fleet Group and COG Financial 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 COG Financial Services are associated (or correlated) with SG Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SG Fleet Group has no effect on the direction of COG Financial i.e., COG Financial and SG Fleet go up and down completely randomly.

Pair Corralation between COG Financial and SG Fleet

Assuming the 90 days trading horizon COG Financial Services is expected to generate 8.18 times more return on investment than SG Fleet. However, COG Financial is 8.18 times more volatile than SG Fleet Group. It trades about 0.17 of its potential returns per unit of risk. SG Fleet Group is currently generating about 0.15 per unit of risk. If you would invest  92.00  in COG Financial Services on October 25, 2024 and sell it today you would earn a total of  7.00  from holding COG Financial Services or generate 7.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

COG Financial Services  vs.  SG Fleet Group

COG Financial Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COG Financial Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, COG Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SG Fleet Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SG Fleet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COG Financial and SG Fleet

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

The idea behind COG Financial Services and SG Fleet Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.