Correlation Between Comfort Systems and Cadeler AS

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

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

Diversification Opportunities for Comfort Systems and Cadeler AS

-0.59

Correlation Coefficient

Comfort Systems  Cadeler AS

Excellent diversification

The 3 months correlation between Comfort and Cadeler is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Comfort Systems USA and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Comfort Systems 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 Comfort Systems USA are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Comfort Systems i.e., Comfort Systems and Cadeler AS go up and down completely randomly.

Pair Corralation between Comfort Systems and Cadeler AS

Considering the 90-day investment horizon Comfort Systems USA is expected to generate 1.26 times more return on investment than Cadeler AS. However, Comfort Systems is 1.26 times more volatile than Cadeler AS. It trades about 0.12 of its potential returns per unit of risk. Cadeler AS is currently generating about 0.05 per unit of risk. If you would invest  11,611  in Comfort Systems USA on October 11, 2024 and sell it today you would earn a total of  33,416  from holding Comfort Systems USA or generate 287.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	52.82%
Values	Daily Returns

Comfort Systems USA  vs.  Cadeler AS

Comfort Systems USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comfort Systems USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward indicators, Comfort Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Comfort Systems and Cadeler AS

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

The idea behind Comfort Systems USA and Cadeler AS 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 Transaction History module to view history of all your transactions and understand their impact on performance.