Correlation Between Costco Wholesale and CNVISION MEDIA

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

By analyzing existing cross correlation between Costco Wholesale Corp and CNVISION MEDIA, you can compare the effects of market volatilities on Costco Wholesale and CNVISION MEDIA 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 Costco Wholesale with a short position of CNVISION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costco Wholesale and CNVISION MEDIA.

Diversification Opportunities for Costco Wholesale and CNVISION MEDIA

0.24

Correlation Coefficient

Costco Wholesale  CNVISION MEDIA

Modest diversification

The 3 months correlation between Costco and CNVISION is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Costco Wholesale Corp and CNVISION MEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNVISION MEDIA and Costco Wholesale 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 Costco Wholesale Corp are associated (or correlated) with CNVISION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNVISION MEDIA has no effect on the direction of Costco Wholesale i.e., Costco Wholesale and CNVISION MEDIA go up and down completely randomly.

Pair Corralation between Costco Wholesale and CNVISION MEDIA

Assuming the 90 days trading horizon Costco Wholesale Corp is expected to under-perform the CNVISION MEDIA. But the stock apears to be less risky and, when comparing its historical volatility, Costco Wholesale Corp is 1.86 times less risky than CNVISION MEDIA. The stock trades about -0.07 of its potential returns per unit of risk. The CNVISION MEDIA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5.80  in CNVISION MEDIA on December 22, 2024 and sell it today you would earn a total of  0.30  from holding CNVISION MEDIA or generate 5.17% return on investment over 90 days.

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

Costco Wholesale Corp  vs.  CNVISION MEDIA

Costco Wholesale Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Costco Wholesale Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CNVISION MEDIA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CNVISION MEDIA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CNVISION MEDIA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Costco Wholesale and CNVISION MEDIA

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

The idea behind Costco Wholesale Corp and CNVISION MEDIA 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.