Correlation Between Mauna Kea and Compagnie

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

By analyzing existing cross correlation between Mauna Kea Technologies and Compagnie du Cambodge, you can compare the effects of market volatilities on Mauna Kea and Compagnie 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 Mauna Kea with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mauna Kea and Compagnie.

Diversification Opportunities for Mauna Kea and Compagnie

0.36

Correlation Coefficient

Mauna Kea  Compagnie

Weak diversification

The 3 months correlation between Mauna and Compagnie is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mauna Kea Technologies and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge and Mauna Kea 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 Mauna Kea Technologies are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Mauna Kea i.e., Mauna Kea and Compagnie go up and down completely randomly.

Pair Corralation between Mauna Kea and Compagnie

Assuming the 90 days trading horizon Mauna Kea Technologies is expected to under-perform the Compagnie. But the stock apears to be less risky and, when comparing its historical volatility, Mauna Kea Technologies is 66.23 times less risky than Compagnie. The stock trades about -0.27 of its potential returns per unit of risk. The Compagnie du Cambodge is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  9,500  in Compagnie du Cambodge on September 27, 2024 and sell it today you would earn a total of  600.00  from holding Compagnie du Cambodge or generate 6.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Mauna Kea Technologies  vs.  Compagnie du Cambodge

Mauna Kea Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mauna Kea Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Compagnie du Cambodge

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mauna Kea and Compagnie

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

The idea behind Mauna Kea Technologies and Compagnie du Cambodge 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.