Correlation Between Carawine Resources and Supply Network

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

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

Diversification Opportunities for Carawine Resources and Supply Network

-0.39

Correlation Coefficient

Carawine Resources  Supply Network

Very good diversification

The 3 months correlation between Carawine and Supply is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Supply Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supply Network and Carawine Resources 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 Carawine Resources Limited are associated (or correlated) with Supply Network. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supply Network has no effect on the direction of Carawine Resources i.e., Carawine Resources and Supply Network go up and down completely randomly.

Pair Corralation between Carawine Resources and Supply Network

Assuming the 90 days trading horizon Carawine Resources is expected to generate 4.12 times less return on investment than Supply Network. In addition to that, Carawine Resources is 2.26 times more volatile than Supply Network. It trades about 0.01 of its total potential returns per unit of risk. Supply Network is currently generating about 0.13 per unit of volatility. If you would invest  1,171  in Supply Network on October 6, 2024 and sell it today you would earn a total of  2,101  from holding Supply Network or generate 179.42% return on investment over 90 days.

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

Carawine Resources Limited  vs.  Supply Network

Carawine Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carawine Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Carawine Resources may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Supply Network

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Supply Network are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Supply Network is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carawine Resources and Supply Network

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

The idea behind Carawine Resources Limited and Supply Network 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.