Correlation Between Cuprum and Blumar

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

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

Diversification Opportunities for Cuprum and Blumar

-0.03

Correlation Coefficient

Cuprum  Blumar

Good diversification

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

Pair Corralation between Cuprum and Blumar

Assuming the 90 days trading horizon Cuprum is expected to generate 3.18 times more return on investment than Blumar. However, Cuprum is 3.18 times more volatile than Blumar. It trades about 0.06 of its potential returns per unit of risk. Blumar is currently generating about -0.06 per unit of risk. If you would invest  5,051  in Cuprum on September 5, 2024 and sell it today you would earn a total of  228.00  from holding Cuprum or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	31.67%
Values	Daily Returns

Cuprum  vs.  Blumar

Cuprum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cuprum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cuprum is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Blumar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blumar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blumar is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cuprum and Blumar

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

The idea behind Cuprum and Blumar 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.