Correlation Between Intrepid Potash and CGA Old

Can any of the company-specific risk be diversified away by investing in both Intrepid Potash and CGA Old 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 Intrepid Potash and CGA Old into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intrepid Potash and CGA Old, you can compare the effects of market volatilities on Intrepid Potash and CGA Old 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 Intrepid Potash with a short position of CGA Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Potash and CGA Old.

Diversification Opportunities for Intrepid Potash and CGA Old

0.42

Correlation Coefficient

Intrepid Potash  CGA Old

Very weak diversification

The 3 months correlation between Intrepid and CGA is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Potash and CGA Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGA Old and Intrepid Potash 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 Intrepid Potash are associated (or correlated) with CGA Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGA Old has no effect on the direction of Intrepid Potash i.e., Intrepid Potash and CGA Old go up and down completely randomly.

Pair Corralation between Intrepid Potash and CGA Old

Considering the 90-day investment horizon Intrepid Potash is expected to under-perform the CGA Old. But the stock apears to be less risky and, when comparing its historical volatility, Intrepid Potash is 2.09 times less risky than CGA Old. The stock trades about -0.01 of its potential returns per unit of risk. The CGA Old is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  411.00  in CGA Old on October 11, 2024 and sell it today you would lose (213.00) from holding CGA Old or give up 51.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.15%
Values	Daily Returns

Intrepid Potash  vs.  CGA Old

Intrepid Potash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intrepid Potash has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Intrepid Potash is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

CGA Old

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CGA Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating technical and fundamental indicators, CGA Old may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Intrepid Potash and CGA Old

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

The idea behind Intrepid Potash and CGA Old 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.