Correlation Between Cambridge Technology and Country Club

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

By analyzing existing cross correlation between Cambridge Technology Enterprises and Country Club Hospitality, you can compare the effects of market volatilities on Cambridge Technology and Country Club 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 Cambridge Technology with a short position of Country Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Technology and Country Club.

Diversification Opportunities for Cambridge Technology and Country Club

0.07

Correlation Coefficient

Cambridge Technology  Country Club

Significant diversification

The 3 months correlation between Cambridge and Country is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Country Club Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Club Hospitality and Cambridge 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 Cambridge Technology Enterprises are associated (or correlated) with Country Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Club Hospitality has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Country Club go up and down completely randomly.

Pair Corralation between Cambridge Technology and Country Club

Assuming the 90 days trading horizon Cambridge Technology is expected to generate 3.56 times less return on investment than Country Club. But when comparing it to its historical volatility, Cambridge Technology Enterprises is 1.03 times less risky than Country Club. It trades about 0.02 of its potential returns per unit of risk. Country Club Hospitality is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,814  in Country Club Hospitality on October 22, 2024 and sell it today you would earn a total of  141.00  from holding Country Club Hospitality or generate 7.77% return on investment over 90 days.

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

Cambridge Technology Enterpris  vs.  Country Club Hospitality

Cambridge Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Cambridge Technology is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Country Club Hospitality

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Country Club Hospitality are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical indicators, Country Club may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cambridge Technology and Country Club

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

The idea behind Cambridge Technology Enterprises and Country Club Hospitality 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.