Correlation Between Sound Energy and Cgrowth Capital

Can any of the company-specific risk be diversified away by investing in both Sound Energy and Cgrowth Capital 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 Sound Energy and Cgrowth Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sound Energy plc and Cgrowth Capital, you can compare the effects of market volatilities on Sound Energy and Cgrowth Capital 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 Sound Energy with a short position of Cgrowth Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Energy and Cgrowth Capital.

Diversification Opportunities for Sound Energy and Cgrowth Capital

-0.3

Correlation Coefficient

Sound Energy  Cgrowth Capital

Very good diversification

The 3 months correlation between Sound and Cgrowth is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sound Energy plc and Cgrowth Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cgrowth Capital and Sound Energy 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 Sound Energy plc are associated (or correlated) with Cgrowth Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cgrowth Capital has no effect on the direction of Sound Energy i.e., Sound Energy and Cgrowth Capital go up and down completely randomly.

Pair Corralation between Sound Energy and Cgrowth Capital

If you would invest  0.20  in Cgrowth Capital on September 4, 2024 and sell it today you would earn a total of  0.20  from holding Cgrowth Capital or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Sound Energy plc  vs.  Cgrowth Capital

Sound Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sound Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cgrowth Capital

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cgrowth Capital are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Cgrowth Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sound Energy and Cgrowth Capital

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

The idea behind Sound Energy plc and Cgrowth Capital 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.