Correlation Between Palram and C I

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

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

Diversification Opportunities for Palram and C I

0.08

Correlation Coefficient

Palram  C I

Significant diversification

The 3 months correlation between Palram and CISY is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Palram and C I Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C I Systems and Palram 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 Palram are associated (or correlated) with C I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C I Systems has no effect on the direction of Palram i.e., Palram and C I go up and down completely randomly.

Pair Corralation between Palram and C I

Assuming the 90 days trading horizon Palram is expected to generate 0.52 times more return on investment than C I. However, Palram is 1.91 times less risky than C I. It trades about 0.16 of its potential returns per unit of risk. C I Systems is currently generating about -0.12 per unit of risk. If you would invest  794,800  in Palram on October 1, 2024 and sell it today you would earn a total of  27,500  from holding Palram or generate 3.46% return on investment over 90 days.

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

Palram  vs.  C I Systems

Palram

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palram are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Palram sustained solid returns over the last few months and may actually be approaching a breakup point.

C I Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in C I Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, C I is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Palram and C I

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

The idea behind Palram and C I Systems 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.