Correlation Between Collins Foods and 225401AC2

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Can any of the company-specific risk be diversified away by investing in both Collins Foods and 225401AC2 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 Collins Foods and 225401AC2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods Limited and CS 4282 09 JAN 28, you can compare the effects of market volatilities on Collins Foods and 225401AC2 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 Collins Foods with a short position of 225401AC2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and 225401AC2.

Diversification Opportunities for Collins Foods and 225401AC2

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Collins and 225401AC2 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods Limited and CS 4282 09 JAN 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS 4282 09 and Collins Foods 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 Collins Foods Limited are associated (or correlated) with 225401AC2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS 4282 09 has no effect on the direction of Collins Foods i.e., Collins Foods and 225401AC2 go up and down completely randomly.

Pair Corralation between Collins Foods and 225401AC2

Assuming the 90 days horizon Collins Foods Limited is expected to generate 4.56 times more return on investment than 225401AC2. However, Collins Foods is 4.56 times more volatile than CS 4282 09 JAN 28. It trades about 0.14 of its potential returns per unit of risk. CS 4282 09 JAN 28 is currently generating about -0.14 per unit of risk. If you would invest  600.00  in Collins Foods Limited on September 1, 2025 and sell it today you would earn a total of  130.00  from holding Collins Foods Limited or generate 21.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy63.08%
ValuesDaily Returns

Collins Foods Limited  vs.  CS 4282 09 JAN 28

 Performance 
       Timeline  
Collins Foods Limited 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Collins Foods reported solid returns over the last few months and may actually be approaching a breakup point.
CS 4282 09 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days CS 4282 09 JAN 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 225401AC2 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Collins Foods and 225401AC2 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Collins Foods and 225401AC2

The main advantage of trading using opposite Collins Foods and 225401AC2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, 225401AC2 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 225401AC2 will offset losses from the drop in 225401AC2's long position.
The idea behind Collins Foods Limited and CS 4282 09 JAN 28 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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