Correlation Between Cambridge Technology and Investment Trust

Can any of the company-specific risk be diversified away by investing in both Cambridge Technology and Investment Trust 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 Investment Trust 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 The Investment Trust, you can compare the effects of market volatilities on Cambridge Technology and Investment Trust 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 Investment Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambridge Technology and Investment Trust.

Diversification Opportunities for Cambridge Technology and Investment Trust

-0.05

Correlation Coefficient

Cambridge Technology  Investment Trust

Good diversification

The 3 months correlation between Cambridge and Investment is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust 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 Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Investment Trust go up and down completely randomly.

Pair Corralation between Cambridge Technology and Investment Trust

Assuming the 90 days trading horizon Cambridge Technology Enterprises is expected to generate 1.31 times more return on investment than Investment Trust. However, Cambridge Technology is 1.31 times more volatile than The Investment Trust. It trades about 0.0 of its potential returns per unit of risk. The Investment Trust is currently generating about -0.17 per unit of risk. If you would invest  9,437  in Cambridge Technology Enterprises on October 24, 2024 and sell it today you would lose (318.00) from holding Cambridge Technology Enterprises or give up 3.37% of portfolio value over 90 days.

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

Cambridge Technology Enterpris  vs.  The Investment Trust

Cambridge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambridge Technology Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Cambridge Technology is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cambridge Technology and Investment Trust

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

The idea behind Cambridge Technology Enterprises and The Investment Trust 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.