Correlation Between CLOAK and Sushi

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

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

Diversification Opportunities for CLOAK and Sushi

0.25

Correlation Coefficient

CLOAK  Sushi

Modest diversification

The 3 months correlation between CLOAK and Sushi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CLOAK and Sushi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sushi and CLOAK 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 CLOAK are associated (or correlated) with Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sushi has no effect on the direction of CLOAK i.e., CLOAK and Sushi go up and down completely randomly.

Pair Corralation between CLOAK and Sushi

If you would invest  55.00  in Sushi on September 2, 2024 and sell it today you would earn a total of  79.00  from holding Sushi or generate 143.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.52%
Values	Daily Returns

CLOAK  vs.  Sushi

CLOAK

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sushi

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sushi are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Sushi exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLOAK and Sushi

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

The idea behind CLOAK and Sushi 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.