Correlation Between CFG BANK and HIGHTECH PAYMENT

Can any of the company-specific risk be diversified away by investing in both CFG BANK and HIGHTECH PAYMENT 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 CFG BANK and HIGHTECH PAYMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CFG BANK and HIGHTECH PAYMENT SYSTEMS, you can compare the effects of market volatilities on CFG BANK and HIGHTECH PAYMENT 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 CFG BANK with a short position of HIGHTECH PAYMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CFG BANK and HIGHTECH PAYMENT.

Diversification Opportunities for CFG BANK and HIGHTECH PAYMENT

0.55

Correlation Coefficient

CFG BANK  HIGHTECH PAYMENT

Very weak diversification

The 3 months correlation between CFG and HIGHTECH is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CFG BANK and HIGHTECH PAYMENT SYSTEMS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIGHTECH PAYMENT SYSTEMS and CFG BANK 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 CFG BANK are associated (or correlated) with HIGHTECH PAYMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIGHTECH PAYMENT SYSTEMS has no effect on the direction of CFG BANK i.e., CFG BANK and HIGHTECH PAYMENT go up and down completely randomly.

Pair Corralation between CFG BANK and HIGHTECH PAYMENT

Assuming the 90 days trading horizon CFG BANK is expected to generate 1.74 times less return on investment than HIGHTECH PAYMENT. But when comparing it to its historical volatility, CFG BANK is 1.46 times less risky than HIGHTECH PAYMENT. It trades about 0.02 of its potential returns per unit of risk. HIGHTECH PAYMENT SYSTEMS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  60,700  in HIGHTECH PAYMENT SYSTEMS on December 31, 2024 and sell it today you would earn a total of  1,300  from holding HIGHTECH PAYMENT SYSTEMS or generate 2.14% return on investment over 90 days.

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

CFG BANK  vs.  HIGHTECH PAYMENT SYSTEMS

CFG BANK

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CFG BANK are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, CFG BANK is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

HIGHTECH PAYMENT SYSTEMS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HIGHTECH PAYMENT SYSTEMS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, HIGHTECH PAYMENT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CFG BANK and HIGHTECH PAYMENT

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

The idea behind CFG BANK and HIGHTECH PAYMENT SYSTEMS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.