Correlation Between Cintas and LABOCANNA

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

By analyzing existing cross correlation between Cintas and LABOCANNA SA ZY 10, you can compare the effects of market volatilities on Cintas and LABOCANNA 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 Cintas with a short position of LABOCANNA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cintas and LABOCANNA.

Diversification Opportunities for Cintas and LABOCANNA

-0.23

Correlation Coefficient

Cintas  LABOCANNA

Very good diversification

The 3 months correlation between Cintas and LABOCANNA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cintas and LABOCANNA SA ZY 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LABOCANNA SA ZY and Cintas 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 Cintas are associated (or correlated) with LABOCANNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LABOCANNA SA ZY has no effect on the direction of Cintas i.e., Cintas and LABOCANNA go up and down completely randomly.

Pair Corralation between Cintas and LABOCANNA

Assuming the 90 days horizon Cintas is expected to generate 0.87 times more return on investment than LABOCANNA. However, Cintas is 1.15 times less risky than LABOCANNA. It trades about -0.01 of its potential returns per unit of risk. LABOCANNA SA ZY 10 is currently generating about -0.1 per unit of risk. If you would invest  18,295  in Cintas on September 22, 2024 and sell it today you would lose (445.00) from holding Cintas or give up 2.43% of portfolio value over 90 days.

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

Cintas  vs.  LABOCANNA SA ZY 10

Cintas

Risk-Adjusted Performance

0 of 100

Very Weak

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

LABOCANNA SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LABOCANNA SA ZY 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Cintas and LABOCANNA

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

The idea behind Cintas and LABOCANNA SA ZY 10 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.