Correlation Between CNJ Capital and SNC Lavalin

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

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

Diversification Opportunities for CNJ Capital and SNC Lavalin

0.0

Correlation Coefficient

CNJ Capital  SNC Lavalin

Pay attention - limited upside

The 3 months correlation between CNJ and SNC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CNJ Capital Investments and SNC Lavalin Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNC Lavalin Group and CNJ Capital 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 CNJ Capital Investments are associated (or correlated) with SNC Lavalin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNC Lavalin Group has no effect on the direction of CNJ Capital i.e., CNJ Capital and SNC Lavalin go up and down completely randomly.

Pair Corralation between CNJ Capital and SNC Lavalin

Assuming the 90 days trading horizon CNJ Capital is expected to generate 1.27 times less return on investment than SNC Lavalin. In addition to that, CNJ Capital is 2.52 times more volatile than SNC Lavalin Group. It trades about 0.04 of its total potential returns per unit of risk. SNC Lavalin Group is currently generating about 0.11 per unit of volatility. If you would invest  4,271  in SNC Lavalin Group on September 23, 2024 and sell it today you would earn a total of  3,238  from holding SNC Lavalin Group or generate 75.81% return on investment over 90 days.

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

CNJ Capital Investments  vs.  SNC Lavalin Group

CNJ Capital Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNJ Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CNJ Capital is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

SNC Lavalin Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SNC Lavalin Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, SNC Lavalin displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNJ Capital and SNC Lavalin

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

The idea behind CNJ Capital Investments and SNC Lavalin Group 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.