Correlation Between Citrus Leisure and Carson Cumberbatch

Can any of the company-specific risk be diversified away by investing in both Citrus Leisure and Carson Cumberbatch 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 Citrus Leisure and Carson Cumberbatch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citrus Leisure PLC and Carson Cumberbatch PLC, you can compare the effects of market volatilities on Citrus Leisure and Carson Cumberbatch 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 Citrus Leisure with a short position of Carson Cumberbatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citrus Leisure and Carson Cumberbatch.

Diversification Opportunities for Citrus Leisure and Carson Cumberbatch

-0.61

Correlation Coefficient

Citrus Leisure  Carson Cumberbatch

Excellent diversification

The 3 months correlation between Citrus and Carson is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Citrus Leisure PLC and Carson Cumberbatch PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carson Cumberbatch PLC and Citrus Leisure 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 Citrus Leisure PLC are associated (or correlated) with Carson Cumberbatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carson Cumberbatch PLC has no effect on the direction of Citrus Leisure i.e., Citrus Leisure and Carson Cumberbatch go up and down completely randomly.

Pair Corralation between Citrus Leisure and Carson Cumberbatch

Assuming the 90 days trading horizon Citrus Leisure PLC is expected to under-perform the Carson Cumberbatch. But the stock apears to be less risky and, when comparing its historical volatility, Citrus Leisure PLC is 1.56 times less risky than Carson Cumberbatch. The stock trades about -0.07 of its potential returns per unit of risk. The Carson Cumberbatch PLC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  34,375  in Carson Cumberbatch PLC on December 4, 2024 and sell it today you would earn a total of  8,350  from holding Carson Cumberbatch PLC or generate 24.29% return on investment over 90 days.

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

Citrus Leisure PLC  vs.  Carson Cumberbatch PLC

Citrus Leisure PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Citrus Leisure PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Carson Cumberbatch PLC

Risk-Adjusted Performance

OK

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

Pair Trading with Citrus Leisure and Carson Cumberbatch

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

The idea behind Citrus Leisure PLC and Carson Cumberbatch PLC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.