Correlation Between Agripure Holdings and CSP Steel

Can any of the company-specific risk be diversified away by investing in both Agripure Holdings and CSP Steel 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 Agripure Holdings and CSP Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agripure Holdings Public and CSP Steel Center, you can compare the effects of market volatilities on Agripure Holdings and CSP Steel 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 Agripure Holdings with a short position of CSP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agripure Holdings and CSP Steel.

Diversification Opportunities for Agripure Holdings and CSP Steel

0.7

Correlation Coefficient

Agripure Holdings  CSP Steel

Poor diversification

The 3 months correlation between Agripure and CSP is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Agripure Holdings Public and CSP Steel Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Steel Center and Agripure Holdings 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 Agripure Holdings Public are associated (or correlated) with CSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Steel Center has no effect on the direction of Agripure Holdings i.e., Agripure Holdings and CSP Steel go up and down completely randomly.

Pair Corralation between Agripure Holdings and CSP Steel

Assuming the 90 days trading horizon Agripure Holdings Public is expected to under-perform the CSP Steel. But the stock apears to be less risky and, when comparing its historical volatility, Agripure Holdings Public is 1.64 times less risky than CSP Steel. The stock trades about -0.09 of its potential returns per unit of risk. The CSP Steel Center is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  54.00  in CSP Steel Center on December 22, 2024 and sell it today you would lose (3.00) from holding CSP Steel Center or give up 5.56% of portfolio value over 90 days.

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

Agripure Holdings Public  vs.  CSP Steel Center

Agripure Holdings Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agripure Holdings Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

CSP Steel Center

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSP Steel Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CSP Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Agripure Holdings and CSP Steel

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

The idea behind Agripure Holdings Public and CSP Steel Center 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 Anywhere module to track or share privately all of your investments from the convenience of any device.