Correlation Between CIE Automotive and Tree House

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

By analyzing existing cross correlation between CIE Automotive India and Tree House Education, you can compare the effects of market volatilities on CIE Automotive and Tree House 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 CIE Automotive with a short position of Tree House. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIE Automotive and Tree House.

Diversification Opportunities for CIE Automotive and Tree House

-0.54

Correlation Coefficient

CIE Automotive  Tree House

Excellent diversification

The 3 months correlation between CIE and Tree is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CIE Automotive India and Tree House Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree House Education and CIE Automotive 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 CIE Automotive India are associated (or correlated) with Tree House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree House Education has no effect on the direction of CIE Automotive i.e., CIE Automotive and Tree House go up and down completely randomly.

Pair Corralation between CIE Automotive and Tree House

Assuming the 90 days trading horizon CIE Automotive India is expected to generate 0.69 times more return on investment than Tree House. However, CIE Automotive India is 1.44 times less risky than Tree House. It trades about 0.04 of its potential returns per unit of risk. Tree House Education is currently generating about -0.19 per unit of risk. If you would invest  41,390  in CIE Automotive India on April 21, 2025 and sell it today you would earn a total of  1,520  from holding CIE Automotive India or generate 3.67% return on investment over 90 days.

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

CIE Automotive India  vs.  Tree House Education

CIE Automotive India

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CIE Automotive India are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, CIE Automotive is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Tree House Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tree House Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CIE Automotive and Tree House

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

The idea behind CIE Automotive India and Tree House Education 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .