Correlation Between Centrifuge and Maple

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

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

Diversification Opportunities for Centrifuge and Maple

0.03

Correlation Coefficient

Centrifuge  Maple

Significant diversification

The 3 months correlation between Centrifuge and Maple is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Centrifuge and Maple in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple and Centrifuge 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 Centrifuge are associated (or correlated) with Maple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple has no effect on the direction of Centrifuge i.e., Centrifuge and Maple go up and down completely randomly.

Pair Corralation between Centrifuge and Maple

Assuming the 90 days trading horizon Centrifuge is expected to generate 1.37 times less return on investment than Maple. But when comparing it to its historical volatility, Centrifuge is 1.45 times less risky than Maple. It trades about 0.1 of its potential returns per unit of risk. Maple is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,598  in Maple on September 2, 2024 and sell it today you would earn a total of  500.00  from holding Maple or generate 31.29% return on investment over 90 days.

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

Centrifuge  vs.  Maple

Centrifuge

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrifuge are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Centrifuge exhibited solid returns over the last few months and may actually be approaching a breakup point.

Maple

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Maple are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, Maple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Centrifuge and Maple

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

The idea behind Centrifuge and Maple 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.