Correlation Between Perimeter Solutions and Cabot

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

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

Diversification Opportunities for Perimeter Solutions and Cabot

0.52

Correlation Coefficient

Perimeter Solutions  Cabot

Very weak diversification

The 3 months correlation between Perimeter and Cabot is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Perimeter Solutions SA and Cabot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabot and Perimeter Solutions 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 Perimeter Solutions SA are associated (or correlated) with Cabot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabot has no effect on the direction of Perimeter Solutions i.e., Perimeter Solutions and Cabot go up and down completely randomly.

Pair Corralation between Perimeter Solutions and Cabot

Considering the 90-day investment horizon Perimeter Solutions SA is expected to generate 1.43 times more return on investment than Cabot. However, Perimeter Solutions is 1.43 times more volatile than Cabot. It trades about 0.05 of its potential returns per unit of risk. Cabot is currently generating about -0.01 per unit of risk. If you would invest  1,205  in Perimeter Solutions SA on September 15, 2024 and sell it today you would earn a total of  84.00  from holding Perimeter Solutions SA or generate 6.97% return on investment over 90 days.

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

Perimeter Solutions SA  vs.  Cabot

Perimeter Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Perimeter Solutions SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Perimeter Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cabot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cabot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Cabot is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Perimeter Solutions and Cabot

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

The idea behind Perimeter Solutions SA and Cabot 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.