Correlation Between Country Group and Capital Engineering

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

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

Diversification Opportunities for Country Group and Capital Engineering

0.64

Correlation Coefficient

Country Group  Capital Engineering

Poor diversification

The 3 months correlation between Country and Capital is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Country Group Holdings and Capital Engineering Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Engineering and Country Group 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 Country Group Holdings are associated (or correlated) with Capital Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Engineering has no effect on the direction of Country Group i.e., Country Group and Capital Engineering go up and down completely randomly.

Pair Corralation between Country Group and Capital Engineering

Assuming the 90 days trading horizon Country Group Holdings is expected to generate 2.12 times more return on investment than Capital Engineering. However, Country Group is 2.12 times more volatile than Capital Engineering Network. It trades about -0.02 of its potential returns per unit of risk. Capital Engineering Network is currently generating about -0.11 per unit of risk. If you would invest  73.00  in Country Group Holdings on September 13, 2024 and sell it today you would lose (2.00) from holding Country Group Holdings or give up 2.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Country Group Holdings  vs.  Capital Engineering Network

Country Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Country Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Country Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Capital Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Engineering Network has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Capital Engineering is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Country Group and Capital Engineering

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

The idea behind Country Group Holdings and Capital Engineering Network 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.