Correlation Between CIM FINANCIAL and EXCELSIOR UNITED

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

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

Diversification Opportunities for CIM FINANCIAL and EXCELSIOR UNITED

-0.19

Correlation Coefficient

CIM FINANCIAL  EXCELSIOR UNITED

Good diversification

The 3 months correlation between CIM and EXCELSIOR is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and EXCELSIOR UNITED DEVELOPMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXCELSIOR UNITED DEV and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with EXCELSIOR UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXCELSIOR UNITED DEV has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and EXCELSIOR UNITED go up and down completely randomly.

Pair Corralation between CIM FINANCIAL and EXCELSIOR UNITED

Assuming the 90 days trading horizon CIM FINANCIAL SERVICES is expected to generate 3.54 times more return on investment than EXCELSIOR UNITED. However, CIM FINANCIAL is 3.54 times more volatile than EXCELSIOR UNITED DEVELOPMENT. It trades about 0.12 of its potential returns per unit of risk. EXCELSIOR UNITED DEVELOPMENT is currently generating about -0.07 per unit of risk. If you would invest  1,100  in CIM FINANCIAL SERVICES on September 5, 2024 and sell it today you would earn a total of  100.00  from holding CIM FINANCIAL SERVICES or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CIM FINANCIAL SERVICES  vs.  EXCELSIOR UNITED DEVELOPMENT

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

EXCELSIOR UNITED DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXCELSIOR UNITED DEVELOPMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, EXCELSIOR UNITED is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CIM FINANCIAL and EXCELSIOR UNITED

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

The idea behind CIM FINANCIAL SERVICES and EXCELSIOR UNITED DEVELOPMENT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.