Correlation Between SONASID and CFG BANK

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

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

Diversification Opportunities for SONASID and CFG BANK

0.81

Correlation Coefficient

SONASID  CFG BANK

Very poor diversification

The 3 months correlation between SONASID and CFG is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SONASID and CFG BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFG BANK and SONASID 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 SONASID are associated (or correlated) with CFG BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFG BANK has no effect on the direction of SONASID i.e., SONASID and CFG BANK go up and down completely randomly.

Pair Corralation between SONASID and CFG BANK

Assuming the 90 days trading horizon SONASID is expected to generate 1.05 times less return on investment than CFG BANK. In addition to that, SONASID is 1.54 times more volatile than CFG BANK. It trades about 0.09 of its total potential returns per unit of risk. CFG BANK is currently generating about 0.15 per unit of volatility. If you would invest  15,490  in CFG BANK on October 25, 2024 and sell it today you would earn a total of  7,910  from holding CFG BANK or generate 51.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.49%
Values	Daily Returns

SONASID  vs.  CFG BANK

SONASID

Risk-Adjusted Performance

12 of 100

Good

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

CFG BANK

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CFG BANK are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental drivers, CFG BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SONASID and CFG BANK

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

The idea behind SONASID and CFG BANK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.