Correlation Between Chargeurs and Manitou BF

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

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

Diversification Opportunities for Chargeurs and Manitou BF

0.37

Correlation Coefficient

Chargeurs  Manitou BF

Weak diversification

The 3 months correlation between Chargeurs and Manitou is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chargeurs SA and Manitou BF SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manitou BF SA and Chargeurs 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 Chargeurs SA are associated (or correlated) with Manitou BF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manitou BF SA has no effect on the direction of Chargeurs i.e., Chargeurs and Manitou BF go up and down completely randomly.

Pair Corralation between Chargeurs and Manitou BF

Assuming the 90 days trading horizon Chargeurs SA is expected to under-perform the Manitou BF. But the stock apears to be less risky and, when comparing its historical volatility, Chargeurs SA is 1.0 times less risky than Manitou BF. The stock trades about -0.17 of its potential returns per unit of risk. The Manitou BF SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  1,836  in Manitou BF SA on September 3, 2024 and sell it today you would lose (266.00) from holding Manitou BF SA or give up 14.49% of portfolio value over 90 days.

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

Chargeurs SA  vs.  Manitou BF SA

Chargeurs SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chargeurs SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators 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.

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manitou BF SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators 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.

Pair Trading with Chargeurs and Manitou BF

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

The idea behind Chargeurs SA and Manitou BF SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.