Correlation Between Tucows and CES Energy

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

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

Diversification Opportunities for Tucows and CES Energy

-0.56

Correlation Coefficient

Tucows  CES Energy

Excellent diversification

The 3 months correlation between Tucows and CES is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tucows Inc and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and Tucows 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 Tucows Inc are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Tucows i.e., Tucows and CES Energy go up and down completely randomly.

Pair Corralation between Tucows and CES Energy

Assuming the 90 days horizon Tucows Inc is expected to generate 2.09 times more return on investment than CES Energy. However, Tucows is 2.09 times more volatile than CES Energy Solutions. It trades about 0.03 of its potential returns per unit of risk. CES Energy Solutions is currently generating about -0.19 per unit of risk. If you would invest  2,343  in Tucows Inc on December 28, 2024 and sell it today you would earn a total of  77.00  from holding Tucows Inc or generate 3.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tucows Inc  vs.  CES Energy Solutions

Tucows Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tucows Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Tucows may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CES Energy Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days CES Energy Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tucows and CES Energy

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

The idea behind Tucows Inc and CES Energy Solutions 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 Transaction History module to view history of all your transactions and understand their impact on performance.