Correlation Between CP ALL and Sonic Interfreight

Can any of the company-specific risk be diversified away by investing in both CP ALL and Sonic Interfreight 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 Sonic Interfreight 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 Sonic Interfreight Public, you can compare the effects of market volatilities on CP ALL and Sonic Interfreight 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 Sonic Interfreight. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Sonic Interfreight.

Diversification Opportunities for CP ALL and Sonic Interfreight

-0.76

Correlation Coefficient

CP ALL  Sonic Interfreight

Pay attention - limited upside

The 3 months correlation between CPALL and Sonic is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Sonic Interfreight Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonic Interfreight 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 Sonic Interfreight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonic Interfreight Public has no effect on the direction of CP ALL i.e., CP ALL and Sonic Interfreight go up and down completely randomly.

Pair Corralation between CP ALL and Sonic Interfreight

Assuming the 90 days trading horizon CP ALL Public is expected to generate 0.62 times more return on investment than Sonic Interfreight. However, CP ALL Public is 1.63 times less risky than Sonic Interfreight. It trades about -0.02 of its potential returns per unit of risk. Sonic Interfreight Public is currently generating about -0.03 per unit of risk. If you would invest  6,508  in CP ALL Public on October 5, 2024 and sell it today you would lose (933.00) from holding CP ALL Public or give up 14.34% of portfolio value over 90 days.

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

CP ALL Public  vs.  Sonic Interfreight 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sonic Interfreight Public

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sonic Interfreight Public are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Sonic Interfreight may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CP ALL and Sonic Interfreight

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

The idea behind CP ALL Public and Sonic Interfreight 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.