Correlation Between Cameo Communications and WinMate Communication

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

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

Diversification Opportunities for Cameo Communications and WinMate Communication

0.07

Correlation Coefficient

Cameo Communications  WinMate Communication

Significant diversification

The 3 months correlation between Cameo and WinMate is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC and Cameo Communications 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 Cameo Communications are associated (or correlated) with WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of Cameo Communications i.e., Cameo Communications and WinMate Communication go up and down completely randomly.

Pair Corralation between Cameo Communications and WinMate Communication

Assuming the 90 days trading horizon Cameo Communications is expected to generate 1.92 times more return on investment than WinMate Communication. However, Cameo Communications is 1.92 times more volatile than WinMate Communication INC. It trades about 0.08 of its potential returns per unit of risk. WinMate Communication INC is currently generating about 0.1 per unit of risk. If you would invest  1,040  in Cameo Communications on August 31, 2024 and sell it today you would earn a total of  130.00  from holding Cameo Communications or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Cameo Communications  vs.  WinMate Communication INC

Cameo Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications showed solid returns over the last few months and may actually be approaching a breakup point.

WinMate Communication INC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WinMate Communication INC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WinMate Communication may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Cameo Communications and WinMate Communication

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

The idea behind Cameo Communications and WinMate Communication INC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.