Correlation Between CP ALL and SE Education

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

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

Diversification Opportunities for CP ALL and SE Education

0.42

Correlation Coefficient

CP ALL  SE Education

Very weak diversification

The 3 months correlation between CPALL and SE-ED is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and SE Education Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SE Education Public and CP ALL 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 CP ALL Public are associated (or correlated) with SE Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SE Education Public has no effect on the direction of CP ALL i.e., CP ALL and SE Education go up and down completely randomly.

Pair Corralation between CP ALL and SE Education

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the SE Education. In addition to that, CP ALL is 1.29 times more volatile than SE Education Public. It trades about -0.45 of its total potential returns per unit of risk. SE Education Public is currently generating about 0.01 per unit of volatility. If you would invest  204.00  in SE Education Public on September 22, 2024 and sell it today you would earn a total of  0.00  from holding SE Education Public or generate 0.0% return on investment over 90 days.

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

CP ALL Public  vs.  SE Education Public

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SE Education Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SE Education Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CP ALL and SE Education

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

The idea behind CP ALL Public and SE Education Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.