Correlation Between Conquest Resources and CVS HEALTH

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

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

Diversification Opportunities for Conquest Resources and CVS HEALTH

0.53

Correlation Coefficient

Conquest Resources  CVS HEALTH

Very weak diversification

The 3 months correlation between Conquest and CVS is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Conquest Resources and CVS HEALTH CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS HEALTH CDR and Conquest Resources 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 Conquest Resources are associated (or correlated) with CVS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS HEALTH CDR has no effect on the direction of Conquest Resources i.e., Conquest Resources and CVS HEALTH go up and down completely randomly.

Pair Corralation between Conquest Resources and CVS HEALTH

Assuming the 90 days horizon Conquest Resources is expected to generate 5.28 times more return on investment than CVS HEALTH. However, Conquest Resources is 5.28 times more volatile than CVS HEALTH CDR. It trades about 0.06 of its potential returns per unit of risk. CVS HEALTH CDR is currently generating about -0.55 per unit of risk. If you would invest  2.00  in Conquest Resources on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Conquest Resources 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

Conquest Resources  vs.  CVS HEALTH CDR

Conquest Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conquest Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Conquest Resources is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CVS HEALTH CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVS HEALTH CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Conquest Resources and CVS HEALTH

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

The idea behind Conquest Resources and CVS HEALTH CDR 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.