Correlation Between Glencore PLC and CA Sales

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

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

Diversification Opportunities for Glencore PLC and CA Sales

-0.6

Correlation Coefficient

Glencore PLC  CA Sales

Excellent diversification

The 3 months correlation between Glencore and CAA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Glencore PLC and CA Sales Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CA Sales Holdings and Glencore PLC 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 Glencore PLC are associated (or correlated) with CA Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CA Sales Holdings has no effect on the direction of Glencore PLC i.e., Glencore PLC and CA Sales go up and down completely randomly.

Pair Corralation between Glencore PLC and CA Sales

Assuming the 90 days trading horizon Glencore PLC is expected to under-perform the CA Sales. But the stock apears to be less risky and, when comparing its historical volatility, Glencore PLC is 1.24 times less risky than CA Sales. The stock trades about -0.02 of its potential returns per unit of risk. The CA Sales Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  62,461  in CA Sales Holdings on September 16, 2024 and sell it today you would earn a total of  97,539  from holding CA Sales Holdings or generate 156.16% return on investment over 90 days.

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

Glencore PLC  vs.  CA Sales Holdings

Glencore PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glencore PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Glencore PLC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CA Sales Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CA Sales Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, CA Sales may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Glencore PLC and CA Sales

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

The idea behind Glencore PLC and CA Sales 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.