Correlation Between CS Disco and Global Business

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

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

Diversification Opportunities for CS Disco and Global Business

0.05

Correlation Coefficient

CS Disco  Global Business

Significant diversification

The 3 months correlation between LAW and Global is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CS Disco LLC and Global Business Travel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Business Travel and CS Disco 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 CS Disco LLC are associated (or correlated) with Global Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Business Travel has no effect on the direction of CS Disco i.e., CS Disco and Global Business go up and down completely randomly.

Pair Corralation between CS Disco and Global Business

Considering the 90-day investment horizon CS Disco LLC is expected to under-perform the Global Business. In addition to that, CS Disco is 1.02 times more volatile than Global Business Travel. It trades about 0.0 of its total potential returns per unit of risk. Global Business Travel is currently generating about 0.15 per unit of volatility. If you would invest  751.00  in Global Business Travel on September 19, 2024 and sell it today you would earn a total of  163.00  from holding Global Business Travel or generate 21.7% return on investment over 90 days.

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

CS Disco LLC  vs.  Global Business Travel

CS Disco LLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Global Business Travel

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Business Travel are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Global Business reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CS Disco and Global Business

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

The idea behind CS Disco LLC and Global Business Travel 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.