Correlation Between QUALITY BEVERAGES and CIM FINANCIAL

Can any of the company-specific risk be diversified away by investing in both QUALITY BEVERAGES and CIM FINANCIAL 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 QUALITY BEVERAGES and CIM FINANCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between QUALITY BEVERAGES LTD and CIM FINANCIAL SERVICES, you can compare the effects of market volatilities on QUALITY BEVERAGES and CIM FINANCIAL 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 QUALITY BEVERAGES with a short position of CIM FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of QUALITY BEVERAGES and CIM FINANCIAL.

Diversification Opportunities for QUALITY BEVERAGES and CIM FINANCIAL

0.54

Correlation Coefficient

QUALITY BEVERAGES  CIM FINANCIAL

Very weak diversification

The 3 months correlation between QUALITY and CIM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding QUALITY BEVERAGES LTD and CIM FINANCIAL SERVICES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIM FINANCIAL SERVICES and QUALITY BEVERAGES 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 QUALITY BEVERAGES LTD are associated (or correlated) with CIM FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIM FINANCIAL SERVICES has no effect on the direction of QUALITY BEVERAGES i.e., QUALITY BEVERAGES and CIM FINANCIAL go up and down completely randomly.

Pair Corralation between QUALITY BEVERAGES and CIM FINANCIAL

Assuming the 90 days trading horizon QUALITY BEVERAGES LTD is expected to generate 2.93 times more return on investment than CIM FINANCIAL. However, QUALITY BEVERAGES is 2.93 times more volatile than CIM FINANCIAL SERVICES. It trades about 0.11 of its potential returns per unit of risk. CIM FINANCIAL SERVICES is currently generating about 0.15 per unit of risk. If you would invest  1,075  in QUALITY BEVERAGES LTD on December 29, 2024 and sell it today you would earn a total of  275.00  from holding QUALITY BEVERAGES LTD or generate 25.58% return on investment over 90 days.

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

QUALITY BEVERAGES LTD  vs.  CIM FINANCIAL SERVICES

QUALITY BEVERAGES LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QUALITY BEVERAGES LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, QUALITY BEVERAGES displayed solid returns over the last few months and may actually be approaching a breakup point.

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with QUALITY BEVERAGES and CIM FINANCIAL

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

The idea behind QUALITY BEVERAGES LTD and CIM FINANCIAL SERVICES 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.