Correlation Between Cardno and ENGlobal

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

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

Diversification Opportunities for Cardno and ENGlobal

-0.05

Correlation Coefficient

Cardno  ENGlobal

Good diversification

The 3 months correlation between Cardno and ENGlobal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cardno Limited and ENGlobal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGlobal and Cardno 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 Cardno Limited are associated (or correlated) with ENGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGlobal has no effect on the direction of Cardno i.e., Cardno and ENGlobal go up and down completely randomly.

Pair Corralation between Cardno and ENGlobal

Assuming the 90 days horizon Cardno Limited is expected to under-perform the ENGlobal. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cardno Limited is 1.27 times less risky than ENGlobal. The pink sheet trades about -0.3 of its potential returns per unit of risk. The ENGlobal is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  159.00  in ENGlobal on August 31, 2024 and sell it today you would lose (25.00) from holding ENGlobal or give up 15.72% of portfolio value over 90 days.

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

Cardno Limited  vs.  ENGlobal

Cardno Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cardno Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ENGlobal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGlobal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cardno and ENGlobal

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

The idea behind Cardno Limited and ENGlobal 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.