Correlation Between Credo Brands and Cybertech Systems

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

By analyzing existing cross correlation between Credo Brands Marketing and Cybertech Systems And, you can compare the effects of market volatilities on Credo Brands and Cybertech Systems 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 Credo Brands with a short position of Cybertech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credo Brands and Cybertech Systems.

Diversification Opportunities for Credo Brands and Cybertech Systems

0.72

Correlation Coefficient

Credo Brands  Cybertech Systems

Poor diversification

The 3 months correlation between Credo and Cybertech is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Credo Brands Marketing and Cybertech Systems And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cybertech Systems And and Credo Brands 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 Credo Brands Marketing are associated (or correlated) with Cybertech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cybertech Systems And has no effect on the direction of Credo Brands i.e., Credo Brands and Cybertech Systems go up and down completely randomly.

Pair Corralation between Credo Brands and Cybertech Systems

Assuming the 90 days trading horizon Credo Brands Marketing is expected to generate 0.7 times more return on investment than Cybertech Systems. However, Credo Brands Marketing is 1.43 times less risky than Cybertech Systems. It trades about -0.17 of its potential returns per unit of risk. Cybertech Systems And is currently generating about -0.15 per unit of risk. If you would invest  17,597  in Credo Brands Marketing on December 27, 2024 and sell it today you would lose (4,786) from holding Credo Brands Marketing or give up 27.2% of portfolio value over 90 days.

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

Credo Brands Marketing  vs.  Cybertech Systems And

Credo Brands Marketing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Credo Brands Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cybertech Systems And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cybertech Systems And has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Credo Brands and Cybertech Systems

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

The idea behind Credo Brands Marketing and Cybertech Systems And 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.