Correlation Between Creotech Instruments and CI Games

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

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

Diversification Opportunities for Creotech Instruments and CI Games

0.76

Correlation Coefficient

Creotech Instruments  CI Games

Poor diversification

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

Pair Corralation between Creotech Instruments and CI Games

Assuming the 90 days trading horizon Creotech Instruments SA is expected to generate 1.22 times more return on investment than CI Games. However, Creotech Instruments is 1.22 times more volatile than CI Games SA. It trades about 0.17 of its potential returns per unit of risk. CI Games SA is currently generating about 0.12 per unit of risk. If you would invest  14,500  in Creotech Instruments SA on December 1, 2024 and sell it today you would earn a total of  4,600  from holding Creotech Instruments SA or generate 31.72% return on investment over 90 days.

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

Creotech Instruments SA  vs.  CI Games SA

Creotech Instruments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Creotech Instruments SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Creotech Instruments reported solid returns over the last few months and may actually be approaching a breakup point.

CI Games SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CI Games SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CI Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creotech Instruments and CI Games

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

The idea behind Creotech Instruments SA and CI Games 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.