Correlation Between CWC Energy and Bri Chem

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

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

Diversification Opportunities for CWC Energy and Bri Chem

0.25

Correlation Coefficient

CWC Energy  Bri Chem

Modest diversification

The 3 months correlation between CWC and Bri is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CWC Energy Services and Bri Chem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bri Chem Corp and CWC Energy 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 CWC Energy Services are associated (or correlated) with Bri Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bri Chem Corp has no effect on the direction of CWC Energy i.e., CWC Energy and Bri Chem go up and down completely randomly.

Pair Corralation between CWC Energy and Bri Chem

If you would invest  25.00  in Bri Chem Corp on September 17, 2024 and sell it today you would earn a total of  5.00  from holding Bri Chem Corp or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

CWC Energy Services  vs.  Bri Chem Corp

CWC Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CWC Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CWC Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bri Chem Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bri Chem Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Bri Chem reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CWC Energy and Bri Chem

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

The idea behind CWC Energy Services and Bri Chem 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.