Correlation Between Compagnie and Crossject

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

By analyzing existing cross correlation between Compagnie de Chemins and Crossject, you can compare the effects of market volatilities on Compagnie and Crossject 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 Compagnie with a short position of Crossject. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Crossject.

Diversification Opportunities for Compagnie and Crossject

-0.69

Correlation Coefficient

Compagnie  Crossject

Excellent diversification

The 3 months correlation between Compagnie and Crossject is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Chemins and Crossject in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossject and Compagnie 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 Compagnie de Chemins are associated (or correlated) with Crossject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossject has no effect on the direction of Compagnie i.e., Compagnie and Crossject go up and down completely randomly.

Pair Corralation between Compagnie and Crossject

Assuming the 90 days trading horizon Compagnie de Chemins is expected to generate 0.59 times more return on investment than Crossject. However, Compagnie de Chemins is 1.7 times less risky than Crossject. It trades about 0.16 of its potential returns per unit of risk. Crossject is currently generating about -0.05 per unit of risk. If you would invest  75,000  in Compagnie de Chemins on September 24, 2024 and sell it today you would earn a total of  15,000  from holding Compagnie de Chemins or generate 20.0% return on investment over 90 days.

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

Compagnie de Chemins  vs.  Crossject

Compagnie de Chemins

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Crossject

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crossject has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Compagnie and Crossject

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

The idea behind Compagnie de Chemins and Crossject 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.