Correlation Between Prosafe SE and CPU SOFTWAREHOUSE

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

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

Diversification Opportunities for Prosafe SE and CPU SOFTWAREHOUSE

0.52

Correlation Coefficient

Prosafe SE  CPU SOFTWAREHOUSE

Very weak diversification

The 3 months correlation between Prosafe and CPU is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE and Prosafe SE 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 Prosafe SE are associated (or correlated) with CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of Prosafe SE i.e., Prosafe SE and CPU SOFTWAREHOUSE go up and down completely randomly.

Pair Corralation between Prosafe SE and CPU SOFTWAREHOUSE

Assuming the 90 days horizon Prosafe SE is expected to under-perform the CPU SOFTWAREHOUSE. In addition to that, Prosafe SE is 2.31 times more volatile than CPU SOFTWAREHOUSE. It trades about -0.11 of its total potential returns per unit of risk. CPU SOFTWAREHOUSE is currently generating about 0.02 per unit of volatility. If you would invest  91.00  in CPU SOFTWAREHOUSE on September 20, 2024 and sell it today you would lose (2.00) from holding CPU SOFTWAREHOUSE or give up 2.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Prosafe SE  vs.  CPU SOFTWAREHOUSE

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CPU SOFTWAREHOUSE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prosafe SE and CPU SOFTWAREHOUSE

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

The idea behind Prosafe SE and CPU SOFTWAREHOUSE 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.