Correlation Between FactSet Research and CK Asset

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

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

Diversification Opportunities for FactSet Research and CK Asset

-0.38

Correlation Coefficient

FactSet Research  CK Asset

Very good diversification

The 3 months correlation between FactSet and CHKGF is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems and CK Asset Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CK Asset Holdings and FactSet Research 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 FactSet Research Systems are associated (or correlated) with CK Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CK Asset Holdings has no effect on the direction of FactSet Research i.e., FactSet Research and CK Asset go up and down completely randomly.

Pair Corralation between FactSet Research and CK Asset

Considering the 90-day investment horizon FactSet Research Systems is expected to generate 0.38 times more return on investment than CK Asset. However, FactSet Research Systems is 2.6 times less risky than CK Asset. It trades about 0.05 of its potential returns per unit of risk. CK Asset Holdings is currently generating about -0.05 per unit of risk. If you would invest  39,299  in FactSet Research Systems on September 1, 2024 and sell it today you would earn a total of  9,768  from holding FactSet Research Systems or generate 24.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	55.38%
Values	Daily Returns

FactSet Research Systems  vs.  CK Asset Holdings

FactSet Research Systems

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FactSet Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

CK Asset Holdings

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days CK Asset Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CK Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FactSet Research and CK Asset

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

The idea behind FactSet Research Systems and CK Asset Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.