Correlation Between Materials Analysis and CKM Building

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

By analyzing existing cross correlation between Materials Analysis Technology and CKM Building Material, you can compare the effects of market volatilities on Materials Analysis and CKM Building 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 Materials Analysis with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Analysis and CKM Building.

Diversification Opportunities for Materials Analysis and CKM Building

0.67

Correlation Coefficient

Materials Analysis  CKM Building

Poor diversification

The 3 months correlation between Materials and CKM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Materials Analysis Technology and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and Materials Analysis 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 Materials Analysis Technology are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Materials Analysis i.e., Materials Analysis and CKM Building go up and down completely randomly.

Pair Corralation between Materials Analysis and CKM Building

Assuming the 90 days trading horizon Materials Analysis Technology is expected to under-perform the CKM Building. In addition to that, Materials Analysis is 1.23 times more volatile than CKM Building Material. It trades about -0.1 of its total potential returns per unit of risk. CKM Building Material is currently generating about 0.01 per unit of volatility. If you would invest  3,530  in CKM Building Material on September 17, 2024 and sell it today you would earn a total of  5.00  from holding CKM Building Material or generate 0.14% return on investment over 90 days.

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

Materials Analysis Technology  vs.  CKM Building Material

Materials Analysis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Analysis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

CKM Building Material

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days CKM Building Material has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CKM Building 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 Materials Analysis and CKM Building

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

The idea behind Materials Analysis Technology and CKM Building Material 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.