Correlation Between CLPS and CSP

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

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

Diversification Opportunities for CLPS and CSP

-0.27

Correlation Coefficient

CLPS  CSP

Very good diversification

The 3 months correlation between CLPS and CSP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CLPS Inc and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and CLPS 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 CLPS Inc are associated (or correlated) with CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of CLPS i.e., CLPS and CSP go up and down completely randomly.

Pair Corralation between CLPS and CSP

Given the investment horizon of 90 days CLPS is expected to generate 6.47 times less return on investment than CSP. In addition to that, CLPS is 1.04 times more volatile than CSP Inc. It trades about 0.01 of its total potential returns per unit of risk. CSP Inc is currently generating about 0.07 per unit of volatility. If you would invest  1,390  in CSP Inc on August 30, 2024 and sell it today you would earn a total of  192.00  from holding CSP Inc or generate 13.81% return on investment over 90 days.

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

CLPS Inc  vs.  CSP Inc

CLPS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CLPS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

CSP Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLPS and CSP

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

The idea behind CLPS Inc and CSP Inc 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.