Correlation Between Link Reservations and Centr Brands Corp

Can any of the company-specific risk be diversified away by investing in both Link Reservations and Centr Brands Corp 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 Link Reservations and Centr Brands Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Link Reservations and Centr Brands Corp, you can compare the effects of market volatilities on Link Reservations and Centr Brands Corp 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 Link Reservations with a short position of Centr Brands Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Reservations and Centr Brands Corp.

Diversification Opportunities for Link Reservations and Centr Brands Corp

0.24

Correlation Coefficient

Link Reservations  Centr Brands Corp

Modest diversification

The 3 months correlation between Link and Centr is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Link Reservations and Centr Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centr Brands Corp and Link Reservations 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 Link Reservations are associated (or correlated) with Centr Brands Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centr Brands Corp has no effect on the direction of Link Reservations i.e., Link Reservations and Centr Brands Corp go up and down completely randomly.

Pair Corralation between Link Reservations and Centr Brands Corp

Given the investment horizon of 90 days Link Reservations is expected to generate 0.84 times more return on investment than Centr Brands Corp. However, Link Reservations is 1.2 times less risky than Centr Brands Corp. It trades about 0.08 of its potential returns per unit of risk. Centr Brands Corp is currently generating about 0.04 per unit of risk. If you would invest  0.50  in Link Reservations on September 9, 2024 and sell it today you would lose (0.40) from holding Link Reservations or give up 80.0% of portfolio value over 90 days.

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

Link Reservations  vs.  Centr Brands Corp

Link Reservations

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Link Reservations are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Link Reservations showed solid returns over the last few months and may actually be approaching a breakup point.

Centr Brands Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centr Brands Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Centr Brands Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Link Reservations and Centr Brands Corp

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

The idea behind Link Reservations and Centr Brands Corp 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.