Correlation Between Covenant Logistics and COFCO Joycome

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

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

Diversification Opportunities for Covenant Logistics and COFCO Joycome

-0.14

Correlation Coefficient

Covenant Logistics  COFCO Joycome

Good diversification

The 3 months correlation between Covenant and COFCO is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Covenant Logistics Group and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Covenant Logistics 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 Covenant Logistics Group are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Covenant Logistics i.e., Covenant Logistics and COFCO Joycome go up and down completely randomly.

Pair Corralation between Covenant Logistics and COFCO Joycome

Assuming the 90 days horizon Covenant Logistics Group is expected to under-perform the COFCO Joycome. In addition to that, Covenant Logistics is 4.03 times more volatile than COFCO Joycome Foods. It trades about -0.28 of its total potential returns per unit of risk. COFCO Joycome Foods is currently generating about 0.01 per unit of volatility. If you would invest  17.00  in COFCO Joycome Foods on October 4, 2024 and sell it today you would earn a total of  0.00  from holding COFCO Joycome Foods or generate 0.0% return on investment over 90 days.

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

Covenant Logistics Group  vs.  COFCO Joycome Foods

Covenant Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covenant Logistics Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

COFCO Joycome Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COFCO Joycome Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Covenant Logistics and COFCO Joycome

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

The idea behind Covenant Logistics Group and COFCO Joycome Foods 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.