Correlation Between Camellia Metal and EnTie Commercial

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

By analyzing existing cross correlation between Camellia Metal Co and EnTie Commercial Bank, you can compare the effects of market volatilities on Camellia Metal and EnTie Commercial 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 Camellia Metal with a short position of EnTie Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camellia Metal and EnTie Commercial.

Diversification Opportunities for Camellia Metal and EnTie Commercial

0.34

Correlation Coefficient

Camellia Metal  EnTie Commercial

Weak diversification

The 3 months correlation between Camellia and EnTie is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal Co and EnTie Commercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnTie Commercial Bank and Camellia Metal 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 Camellia Metal Co are associated (or correlated) with EnTie Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnTie Commercial Bank has no effect on the direction of Camellia Metal i.e., Camellia Metal and EnTie Commercial go up and down completely randomly.

Pair Corralation between Camellia Metal and EnTie Commercial

Assuming the 90 days trading horizon Camellia Metal Co is expected to generate 1.21 times more return on investment than EnTie Commercial. However, Camellia Metal is 1.21 times more volatile than EnTie Commercial Bank. It trades about 0.0 of its potential returns per unit of risk. EnTie Commercial Bank is currently generating about -0.01 per unit of risk. If you would invest  1,500  in Camellia Metal Co on September 1, 2024 and sell it today you would lose (15.00) from holding Camellia Metal Co or give up 1.0% of portfolio value over 90 days.

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

Camellia Metal Co  vs.  EnTie Commercial Bank

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Camellia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

EnTie Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnTie Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EnTie Commercial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Camellia Metal and EnTie Commercial

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

The idea behind Camellia Metal Co and EnTie Commercial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.