Correlation Between Arcosa and Cadeler AS

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

By analyzing existing cross correlation between Arcosa Inc and Cadeler AS, you can compare the effects of market volatilities on Arcosa and Cadeler AS 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 Arcosa with a short position of Cadeler AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcosa and Cadeler AS.

Diversification Opportunities for Arcosa and Cadeler AS

-0.52

Correlation Coefficient

Arcosa  Cadeler AS

Excellent diversification

The 3 months correlation between Arcosa and Cadeler is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Arcosa Inc and Cadeler AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadeler AS and Arcosa 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 Arcosa Inc are associated (or correlated) with Cadeler AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadeler AS has no effect on the direction of Arcosa i.e., Arcosa and Cadeler AS go up and down completely randomly.

Pair Corralation between Arcosa and Cadeler AS

Considering the 90-day investment horizon Arcosa Inc is expected to generate 0.93 times more return on investment than Cadeler AS. However, Arcosa Inc is 1.07 times less risky than Cadeler AS. It trades about 0.27 of its potential returns per unit of risk. Cadeler AS is currently generating about -0.01 per unit of risk. If you would invest  8,302  in Arcosa Inc on September 5, 2024 and sell it today you would earn a total of  2,578  from holding Arcosa Inc or generate 31.05% return on investment over 90 days.

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

Arcosa Inc  vs.  Cadeler AS

Arcosa Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arcosa Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Arcosa sustained solid returns over the last few months and may actually be approaching a breakup point.

Cadeler AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Cadeler AS is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Arcosa and Cadeler AS

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

The idea behind Arcosa Inc and Cadeler AS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.