Correlation Between Cargojet and Andlauer HealthcareGr

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

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

Diversification Opportunities for Cargojet and Andlauer HealthcareGr

-0.66

Correlation Coefficient

Cargojet  Andlauer HealthcareGr

Excellent diversification

The 3 months correlation between Cargojet and Andlauer is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cargojet and Andlauer HealthcareGr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Andlauer HealthcareGr and Cargojet 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 Cargojet are associated (or correlated) with Andlauer HealthcareGr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Andlauer HealthcareGr has no effect on the direction of Cargojet i.e., Cargojet and Andlauer HealthcareGr go up and down completely randomly.

Pair Corralation between Cargojet and Andlauer HealthcareGr

Assuming the 90 days trading horizon Cargojet is expected to generate 3.57 times more return on investment than Andlauer HealthcareGr. However, Cargojet is 3.57 times more volatile than Andlauer HealthcareGr. It trades about 0.08 of its potential returns per unit of risk. Andlauer HealthcareGr is currently generating about -0.29 per unit of risk. If you would invest  11,229  in Cargojet on January 29, 2024 and sell it today you would earn a total of  330.00  from holding Cargojet or generate 2.94% return on investment over 90 days.

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

Cargojet  vs.  Andlauer HealthcareGr

Cargojet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cargojet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cargojet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Andlauer HealthcareGr

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Andlauer HealthcareGr are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Andlauer HealthcareGr is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cargojet and Andlauer HealthcareGr

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

The idea behind Cargojet and Andlauer HealthcareGr 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.