Correlation Between Code Green and Caf Serendipity

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

By analyzing existing cross correlation between Code Green Apparel and Caf Serendipity Holdings, you can compare the effects of market volatilities on Code Green and Caf Serendipity 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 Code Green with a short position of Caf Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Code Green and Caf Serendipity.

Diversification Opportunities for Code Green and Caf Serendipity

-0.01

Correlation Coefficient

Code Green  Caf Serendipity

Good diversification

The 3 months correlation between Code and Caf is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Code Green Apparel and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Code Green 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 Code Green Apparel are associated (or correlated) with Caf Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Code Green i.e., Code Green and Caf Serendipity go up and down completely randomly.

Pair Corralation between Code Green and Caf Serendipity

Given the investment horizon of 90 days Code Green is expected to generate 21.8 times less return on investment than Caf Serendipity. But when comparing it to its historical volatility, Code Green Apparel is 8.46 times less risky than Caf Serendipity. It trades about 0.06 of its potential returns per unit of risk. Caf Serendipity Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Caf Serendipity Holdings on May 10, 2025 and sell it today you would earn a total of  0.00  from holding Caf Serendipity Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Code Green Apparel  vs.  Caf Serendipity Holdings

Code Green Apparel

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Code Green Apparel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Code Green exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caf Serendipity Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caf Serendipity Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Caf Serendipity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Code Green and Caf Serendipity

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

The idea behind Code Green Apparel and Caf Serendipity Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.