Correlation Between Casa Systems and Telesat Corp

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

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

Diversification Opportunities for Casa Systems and Telesat Corp

0.2

Correlation Coefficient

Casa Systems  Telesat Corp

Modest diversification

The 3 months correlation between Casa and Telesat is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Casa Systems and Telesat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesat Corp and Casa Systems 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 Casa Systems are associated (or correlated) with Telesat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesat Corp has no effect on the direction of Casa Systems i.e., Casa Systems and Telesat Corp go up and down completely randomly.

Pair Corralation between Casa Systems and Telesat Corp

If you would invest  1,215  in Telesat Corp on September 23, 2024 and sell it today you would earn a total of  508.00  from holding Telesat Corp or generate 41.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

Casa Systems  vs.  Telesat Corp

Casa Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Casa Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Casa Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Telesat Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telesat Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Telesat Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Casa Systems and Telesat Corp

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

The idea behind Casa Systems and Telesat Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.