Correlation Between Collins Foods and Perpetual Equity

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

By analyzing existing cross correlation between Collins Foods and Perpetual Equity Investment, you can compare the effects of market volatilities on Collins Foods and Perpetual Equity 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 Perpetual Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Perpetual Equity.

Diversification Opportunities for Collins Foods and Perpetual Equity

0.35

Correlation Coefficient

Collins Foods  Perpetual Equity

Weak diversification

The 3 months correlation between Collins and Perpetual is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Perpetual Equity Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perpetual Equity Inv 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 are associated (or correlated) with Perpetual Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perpetual Equity Inv has no effect on the direction of Collins Foods i.e., Collins Foods and Perpetual Equity go up and down completely randomly.

Pair Corralation between Collins Foods and Perpetual Equity

Assuming the 90 days trading horizon Collins Foods is expected to generate 1.9 times more return on investment than Perpetual Equity. However, Collins Foods is 1.9 times more volatile than Perpetual Equity Investment. It trades about 0.08 of its potential returns per unit of risk. Perpetual Equity Investment is currently generating about 0.12 per unit of risk. If you would invest  814.00  in Collins Foods on April 25, 2025 and sell it today you would earn a total of  103.00  from holding Collins Foods or generate 12.65% return on investment over 90 days.

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

Collins Foods  vs.  Perpetual Equity Investment

Collins Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Collins Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Collins Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Perpetual Equity Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perpetual Equity Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Perpetual Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Collins Foods and Perpetual Equity

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

The idea behind Collins Foods and Perpetual Equity Investment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.