Correlation Between Caribbean Utilities and Scandium Canada

Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities and Scandium Canada 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 Caribbean Utilities and Scandium Canada into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caribbean Utilities and Scandium Canada, you can compare the effects of market volatilities on Caribbean Utilities and Scandium Canada 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 Caribbean Utilities with a short position of Scandium Canada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Scandium Canada.

Diversification Opportunities for Caribbean Utilities and Scandium Canada

0.08

Correlation Coefficient

Caribbean Utilities  Scandium Canada

Significant diversification

The 3 months correlation between Caribbean and Scandium is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and Scandium Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandium Canada and Caribbean Utilities 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 Caribbean Utilities are associated (or correlated) with Scandium Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandium Canada has no effect on the direction of Caribbean Utilities i.e., Caribbean Utilities and Scandium Canada go up and down completely randomly.

Pair Corralation between Caribbean Utilities and Scandium Canada

Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 0.16 times more return on investment than Scandium Canada. However, Caribbean Utilities is 6.27 times less risky than Scandium Canada. It trades about 0.05 of its potential returns per unit of risk. Scandium Canada is currently generating about -0.01 per unit of risk. If you would invest  1,106  in Caribbean Utilities on September 12, 2024 and sell it today you would earn a total of  295.00  from holding Caribbean Utilities or generate 26.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	92.88%
Values	Daily Returns

Caribbean Utilities  vs.  Scandium Canada

Caribbean Utilities

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caribbean Utilities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caribbean Utilities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Scandium Canada

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Scandium Canada are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Scandium Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribbean Utilities and Scandium Canada

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

The idea behind Caribbean Utilities and Scandium Canada 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.