Correlation Between CLPS and Information Services

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

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

Diversification Opportunities for CLPS and Information Services

-0.58

Correlation Coefficient

CLPS  Information Services

Excellent diversification

The 3 months correlation between CLPS and Information is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CLPS Inc and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of CLPS i.e., CLPS and Information Services go up and down completely randomly.

Pair Corralation between CLPS and Information Services

Given the investment horizon of 90 days CLPS Inc is expected to generate 1.35 times more return on investment than Information Services. However, CLPS is 1.35 times more volatile than Information Services Group. It trades about 0.04 of its potential returns per unit of risk. Information Services Group is currently generating about -0.12 per unit of risk. If you would invest  111.00  in CLPS Inc on November 29, 2024 and sell it today you would earn a total of  5.00  from holding CLPS Inc or generate 4.5% return on investment over 90 days.

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

CLPS Inc  vs.  Information Services Group

CLPS Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLPS Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CLPS may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Information Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Information Services Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CLPS and Information Services

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

The idea behind CLPS Inc and Information Services Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.