Correlation Between Collins Foods and Santana Minerals

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

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

Diversification Opportunities for Collins Foods and Santana Minerals

0.64

Correlation Coefficient

Collins Foods  Santana Minerals

Poor diversification

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

Pair Corralation between Collins Foods and Santana Minerals

Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Santana Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 2.84 times less risky than Santana Minerals. The stock trades about -0.09 of its potential returns per unit of risk. The Santana Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Santana Minerals on September 24, 2024 and sell it today you would earn a total of  12.00  from holding Santana Minerals or generate 35.29% return on investment over 90 days.

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

Collins Foods  vs.  Santana Minerals

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Santana Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Santana Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Collins Foods and Santana Minerals

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

The idea behind Collins Foods and Santana Minerals 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.