Correlation Between Communication Cable and Alumindo Light

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

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

Diversification Opportunities for Communication Cable and Alumindo Light

-0.25

Correlation Coefficient

Communication Cable  Alumindo Light

Very good diversification

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

Pair Corralation between Communication Cable and Alumindo Light

If you would invest  7,400  in Alumindo Light Metal on September 19, 2024 and sell it today you would earn a total of  0.00  from holding Alumindo Light Metal or generate 0.0% return on investment over 90 days.

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

Communication Cable Systems  vs.  Alumindo Light Metal

Communication Cable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Communication Cable Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Alumindo Light Metal

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alumindo Light Metal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Alumindo Light disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Communication Cable and Alumindo Light

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

The idea behind Communication Cable Systems and Alumindo Light Metal 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.