Correlation Between 5N Plus and Colabor

Can any of the company-specific risk be diversified away by investing in both 5N Plus and Colabor 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 5N Plus and Colabor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5N Plus and Colabor Group, you can compare the effects of market volatilities on 5N Plus and Colabor 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 5N Plus with a short position of Colabor. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5N Plus and Colabor.

Diversification Opportunities for 5N Plus and Colabor

0.28

Correlation Coefficient

5N Plus  Colabor

Modest diversification

The 3 months correlation between VNP and Colabor is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding 5N Plus and Colabor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colabor Group and 5N Plus 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 5N Plus are associated (or correlated) with Colabor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colabor Group has no effect on the direction of 5N Plus i.e., 5N Plus and Colabor go up and down completely randomly.

Pair Corralation between 5N Plus and Colabor

Assuming the 90 days trading horizon 5N Plus is expected to generate 0.6 times more return on investment than Colabor. However, 5N Plus is 1.66 times less risky than Colabor. It trades about -0.02 of its potential returns per unit of risk. Colabor Group is currently generating about -0.12 per unit of risk. If you would invest  672.00  in 5N Plus on September 2, 2024 and sell it today you would lose (23.00) from holding 5N Plus or give up 3.42% of portfolio value over 90 days.

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

5N Plus  vs.  Colabor Group

5N Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5N Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, 5N Plus is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Colabor Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 5N Plus and Colabor

The main advantage of trading using opposite 5N Plus and Colabor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5N Plus position performs unexpectedly, Colabor 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 Colabor will offset losses from the drop in Colabor's long position.

The idea behind 5N Plus and Colabor Group 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.