Correlation Between EXCELSIOR UNITED and CAVELL TOURISTIC

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

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

Diversification Opportunities for EXCELSIOR UNITED and CAVELL TOURISTIC

0.6

Correlation Coefficient

EXCELSIOR UNITED  CAVELL TOURISTIC

Poor diversification

The 3 months correlation between EXCELSIOR and CAVELL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding EXCELSIOR UNITED DEVELOPMENT and CAVELL TOURISTIC INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAVELL TOURISTIC INV and EXCELSIOR UNITED 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 EXCELSIOR UNITED DEVELOPMENT are associated (or correlated) with CAVELL TOURISTIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAVELL TOURISTIC INV has no effect on the direction of EXCELSIOR UNITED i.e., EXCELSIOR UNITED and CAVELL TOURISTIC go up and down completely randomly.

Pair Corralation between EXCELSIOR UNITED and CAVELL TOURISTIC

Assuming the 90 days trading horizon EXCELSIOR UNITED DEVELOPMENT is expected to generate 0.11 times more return on investment than CAVELL TOURISTIC. However, EXCELSIOR UNITED DEVELOPMENT is 8.7 times less risky than CAVELL TOURISTIC. It trades about -0.07 of its potential returns per unit of risk. CAVELL TOURISTIC INVESTMENTS is currently generating about -0.18 per unit of risk. If you would invest  1,600  in EXCELSIOR UNITED DEVELOPMENT on September 14, 2024 and sell it today you would lose (25.00) from holding EXCELSIOR UNITED DEVELOPMENT or give up 1.56% of portfolio value over 90 days.

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

EXCELSIOR UNITED DEVELOPMENT  vs.  CAVELL TOURISTIC INVESTMENTS

EXCELSIOR UNITED DEV

Risk-Adjusted Performance

0 of 100

Very Weak

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

CAVELL TOURISTIC INV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAVELL TOURISTIC INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EXCELSIOR UNITED and CAVELL TOURISTIC

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

The idea behind EXCELSIOR UNITED DEVELOPMENT and CAVELL TOURISTIC INVESTMENTS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.