Correlation Between Cameo Communications and Coxon Precise

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

By analyzing existing cross correlation between Cameo Communications and Coxon Precise Industrial, you can compare the effects of market volatilities on Cameo Communications and Coxon Precise 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 Coxon Precise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Coxon Precise.

Diversification Opportunities for Cameo Communications and Coxon Precise

-0.08

Correlation Coefficient

Cameo Communications  Coxon Precise

Good diversification

The 3 months correlation between Cameo and Coxon is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Coxon Precise Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coxon Precise Industrial 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 Coxon Precise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coxon Precise Industrial has no effect on the direction of Cameo Communications i.e., Cameo Communications and Coxon Precise go up and down completely randomly.

Pair Corralation between Cameo Communications and Coxon Precise

Assuming the 90 days trading horizon Cameo Communications is expected to generate 1.93 times less return on investment than Coxon Precise. But when comparing it to its historical volatility, Cameo Communications is 1.06 times less risky than Coxon Precise. It trades about 0.03 of its potential returns per unit of risk. Coxon Precise Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,240  in Coxon Precise Industrial on September 2, 2024 and sell it today you would earn a total of  605.00  from holding Coxon Precise Industrial or generate 48.79% return on investment over 90 days.

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

Cameo Communications  vs.  Coxon Precise Industrial

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.

Coxon Precise Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coxon Precise Industrial 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.

Pair Trading with Cameo Communications and Coxon Precise

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

The idea behind Cameo Communications and Coxon Precise Industrial 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.