Correlation Between Com7 PCL and Carabao Group

Can any of the company-specific risk be diversified away by investing in both Com7 PCL and Carabao Group 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 Com7 PCL and Carabao Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Com7 PCL and Carabao Group Public, you can compare the effects of market volatilities on Com7 PCL and Carabao Group 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 Com7 PCL with a short position of Carabao Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Com7 PCL and Carabao Group.

Diversification Opportunities for Com7 PCL and Carabao Group

0.38

Correlation Coefficient

Com7 PCL  Carabao Group

Weak diversification

The 3 months correlation between Com7 and Carabao is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Com7 PCL and Carabao Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carabao Group Public and Com7 PCL 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 Com7 PCL are associated (or correlated) with Carabao Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carabao Group Public has no effect on the direction of Com7 PCL i.e., Com7 PCL and Carabao Group go up and down completely randomly.

Pair Corralation between Com7 PCL and Carabao Group

Assuming the 90 days trading horizon Com7 PCL is expected to under-perform the Carabao Group. In addition to that, Com7 PCL is 1.35 times more volatile than Carabao Group Public. It trades about -0.01 of its total potential returns per unit of risk. Carabao Group Public is currently generating about 0.17 per unit of volatility. If you would invest  7,550  in Carabao Group Public on September 12, 2024 and sell it today you would earn a total of  475.00  from holding Carabao Group Public or generate 6.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Com7 PCL  vs.  Carabao Group Public

Com7 PCL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Com7 PCL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Com7 PCL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Carabao Group Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carabao Group Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Carabao Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Com7 PCL and Carabao Group

The main advantage of trading using opposite Com7 PCL and Carabao Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Com7 PCL position performs unexpectedly, Carabao Group 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 Carabao Group will offset losses from the drop in Carabao Group's long position.

The idea behind Com7 PCL and Carabao Group Public 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.