Correlation Between Software Circle and Canadian General

Can any of the company-specific risk be diversified away by investing in both Software Circle and Canadian General 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 Software Circle and Canadian General into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Software Circle plc and Canadian General Investments, you can compare the effects of market volatilities on Software Circle and Canadian General 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 Software Circle with a short position of Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and Canadian General.

Diversification Opportunities for Software Circle and Canadian General

0.08

Correlation Coefficient

Software Circle  Canadian General

Significant diversification

The 3 months correlation between Software and Canadian is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle plc and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv and Software Circle 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 Software Circle plc are associated (or correlated) with Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Software Circle i.e., Software Circle and Canadian General go up and down completely randomly.

Pair Corralation between Software Circle and Canadian General

Assuming the 90 days trading horizon Software Circle plc is expected to generate 0.44 times more return on investment than Canadian General. However, Software Circle plc is 2.28 times less risky than Canadian General. It trades about 0.28 of its potential returns per unit of risk. Canadian General Investments is currently generating about -0.24 per unit of risk. If you would invest  2,300  in Software Circle plc on October 10, 2024 and sell it today you would earn a total of  50.00  from holding Software Circle plc or generate 2.17% return on investment over 90 days.

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

Software Circle plc  vs.  Canadian General Investments

Software Circle plc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Software Circle plc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Software Circle may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Canadian General Inv

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian General Investments are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Canadian General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Software Circle and Canadian General

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

The idea behind Software Circle plc and Canadian General Investments 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.