Correlation Between TransAKT and CNDB Old

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

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

Diversification Opportunities for TransAKT and CNDB Old

-0.06

Correlation Coefficient

TransAKT  CNDB Old

Good diversification

The 3 months correlation between TransAKT and CNDB is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding TransAKT and CNDB Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNDB Old and TransAKT 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 TransAKT are associated (or correlated) with CNDB Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNDB Old has no effect on the direction of TransAKT i.e., TransAKT and CNDB Old go up and down completely randomly.

Pair Corralation between TransAKT and CNDB Old

Given the investment horizon of 90 days TransAKT is expected to generate 1113.25 times more return on investment than CNDB Old. However, TransAKT is 1113.25 times more volatile than CNDB Old. It trades about 0.11 of its potential returns per unit of risk. CNDB Old is currently generating about 0.11 per unit of risk. If you would invest  2.50  in TransAKT on October 24, 2024 and sell it today you would lose (2.23) from holding TransAKT or give up 89.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.84%
Values	Daily Returns

TransAKT  vs.  CNDB Old

TransAKT

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

CNDB Old

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TransAKT and CNDB Old

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

The idea behind TransAKT and CNDB Old 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.