Correlation Between 01 Communique and CMG Holdings

Can any of the company-specific risk be diversified away by investing in both 01 Communique and CMG Holdings 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 01 Communique and CMG Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 01 Communique Laboratory and CMG Holdings Group, you can compare the effects of market volatilities on 01 Communique and CMG Holdings 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 01 Communique with a short position of CMG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 01 Communique and CMG Holdings.

Diversification Opportunities for 01 Communique and CMG Holdings

-0.19

Correlation Coefficient

01 Communique  CMG Holdings

Good diversification

The 3 months correlation between OONEF and CMG is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding 01 Communique Laboratory and CMG Holdings Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Holdings Group and 01 Communique 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 01 Communique Laboratory are associated (or correlated) with CMG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Holdings Group has no effect on the direction of 01 Communique i.e., 01 Communique and CMG Holdings go up and down completely randomly.

Pair Corralation between 01 Communique and CMG Holdings

Assuming the 90 days horizon 01 Communique Laboratory is expected to generate 1.93 times more return on investment than CMG Holdings. However, 01 Communique is 1.93 times more volatile than CMG Holdings Group. It trades about 0.38 of its potential returns per unit of risk. CMG Holdings Group is currently generating about 0.05 per unit of risk. If you would invest  5.00  in 01 Communique Laboratory on September 23, 2024 and sell it today you would earn a total of  11.00  from holding 01 Communique Laboratory or generate 220.0% return on investment over 90 days.

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

01 Communique Laboratory  vs.  CMG Holdings Group

01 Communique Laboratory

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 01 Communique Laboratory are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, 01 Communique reported solid returns over the last few months and may actually be approaching a breakup point.

CMG Holdings Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CMG Holdings Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, CMG Holdings is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 01 Communique and CMG Holdings

The main advantage of trading using opposite 01 Communique and CMG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 01 Communique position performs unexpectedly, CMG Holdings 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 CMG Holdings will offset losses from the drop in CMG Holdings' long position.

The idea behind 01 Communique Laboratory and CMG Holdings Group 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.