Correlation Between Sword Group and CBO Territoria

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

By analyzing existing cross correlation between Sword Group SE and CBO Territoria SA, you can compare the effects of market volatilities on Sword Group and CBO Territoria 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 Sword Group with a short position of CBO Territoria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sword Group and CBO Territoria.

Diversification Opportunities for Sword Group and CBO Territoria

0.37

Correlation Coefficient

Sword Group  CBO Territoria

Weak diversification

The 3 months correlation between Sword and CBO is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sword Group SE and CBO Territoria SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBO Territoria SA and Sword Group 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 Sword Group SE are associated (or correlated) with CBO Territoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBO Territoria SA has no effect on the direction of Sword Group i.e., Sword Group and CBO Territoria go up and down completely randomly.

Pair Corralation between Sword Group and CBO Territoria

Assuming the 90 days trading horizon Sword Group SE is expected to under-perform the CBO Territoria. In addition to that, Sword Group is 4.72 times more volatile than CBO Territoria SA. It trades about -0.08 of its total potential returns per unit of risk. CBO Territoria SA is currently generating about 0.09 per unit of volatility. If you would invest  354.00  in CBO Territoria SA on September 18, 2024 and sell it today you would earn a total of  2.00  from holding CBO Territoria SA or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Sword Group SE  vs.  CBO Territoria SA

Sword Group SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sword Group SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sword Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CBO Territoria SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBO Territoria SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CBO Territoria is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sword Group and CBO Territoria

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

The idea behind Sword Group SE and CBO Territoria SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.