Correlation Between Coloray International and Adaptive Plasma

Can any of the company-specific risk be diversified away by investing in both Coloray International and Adaptive Plasma 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 Coloray International and Adaptive Plasma into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coloray International Investment and Adaptive Plasma Technology, you can compare the effects of market volatilities on Coloray International and Adaptive Plasma 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 Coloray International with a short position of Adaptive Plasma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Adaptive Plasma.

Diversification Opportunities for Coloray International and Adaptive Plasma

0.82

Correlation Coefficient

Coloray International  Adaptive Plasma

Very poor diversification

The 3 months correlation between Coloray and Adaptive is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Adaptive Plasma Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaptive Plasma Tech and Coloray International 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 Coloray International Investment are associated (or correlated) with Adaptive Plasma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaptive Plasma Tech has no effect on the direction of Coloray International i.e., Coloray International and Adaptive Plasma go up and down completely randomly.

Pair Corralation between Coloray International and Adaptive Plasma

Assuming the 90 days trading horizon Coloray International Investment is expected to generate 0.64 times more return on investment than Adaptive Plasma. However, Coloray International Investment is 1.57 times less risky than Adaptive Plasma. It trades about -0.07 of its potential returns per unit of risk. Adaptive Plasma Technology is currently generating about -0.07 per unit of risk. If you would invest  91,000  in Coloray International Investment on September 24, 2024 and sell it today you would lose (33,500) from holding Coloray International Investment or give up 36.81% of portfolio value over 90 days.

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

Coloray International Investme  vs.  Adaptive Plasma Technology

Coloray International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coloray International Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Adaptive Plasma Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Plasma Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Coloray International and Adaptive Plasma

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

The idea behind Coloray International Investment and Adaptive Plasma Technology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.