Correlation Between Cirmaker Technology and Beauty Health

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

By analyzing existing cross correlation between Cirmaker Technology and Beauty Health Co, you can compare the effects of market volatilities on Cirmaker Technology and Beauty 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 Cirmaker Technology with a short position of Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cirmaker Technology and Beauty Health.

Diversification Opportunities for Cirmaker Technology and Beauty Health

0.03

Correlation Coefficient

Cirmaker Technology  Beauty Health

Significant diversification

The 3 months correlation between Cirmaker and Beauty is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cirmaker Technology and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health and Cirmaker Technology 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 Cirmaker Technology are associated (or correlated) with Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Cirmaker Technology i.e., Cirmaker Technology and Beauty Health go up and down completely randomly.

Pair Corralation between Cirmaker Technology and Beauty Health

Given the investment horizon of 90 days Cirmaker Technology is expected to generate 7.44 times more return on investment than Beauty Health. However, Cirmaker Technology is 7.44 times more volatile than Beauty Health Co. It trades about 0.03 of its potential returns per unit of risk. Beauty Health Co is currently generating about -0.02 per unit of risk. If you would invest  3.30  in Cirmaker Technology on October 10, 2024 and sell it today you would earn a total of  2.10  from holding Cirmaker Technology or generate 63.64% return on investment over 90 days.

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

Cirmaker Technology  vs.  Beauty Health Co

Cirmaker Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirmaker Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Cirmaker Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Beauty Health

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Beauty Health displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cirmaker Technology and Beauty Health

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

The idea behind Cirmaker Technology and Beauty Health Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.