Correlation Between Cambridge Technology and Selan Exploration

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

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

Diversification Opportunities for Cambridge Technology and Selan Exploration

0.2

Correlation Coefficient

Cambridge Technology  Selan Exploration

Modest diversification

The 3 months correlation between Cambridge and Selan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cambridge Technology Enterpris and Selan Exploration Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selan Exploration and Cambridge Technology 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 Cambridge Technology Enterprises are associated (or correlated) with Selan Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selan Exploration has no effect on the direction of Cambridge Technology i.e., Cambridge Technology and Selan Exploration go up and down completely randomly.

Pair Corralation between Cambridge Technology and Selan Exploration

Assuming the 90 days trading horizon Cambridge Technology Enterprises is expected to generate 0.95 times more return on investment than Selan Exploration. However, Cambridge Technology Enterprises is 1.05 times less risky than Selan Exploration. It trades about 0.03 of its potential returns per unit of risk. Selan Exploration Technology is currently generating about -0.03 per unit of risk. If you would invest  10,185  in Cambridge Technology Enterprises on September 23, 2024 and sell it today you would earn a total of  325.00  from holding Cambridge Technology Enterprises or generate 3.19% return on investment over 90 days.

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

Cambridge Technology Enterpris  vs.  Selan Exploration Technology

Cambridge Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cambridge Technology Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Cambridge Technology is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Selan Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Selan Exploration Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Selan Exploration is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cambridge Technology and Selan Exploration

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

The idea behind Cambridge Technology Enterprises and Selan Exploration Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.