Correlation Between CLPS and Sigma Labs

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

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

Diversification Opportunities for CLPS and Sigma Labs

0.25

Correlation Coefficient

CLPS  Sigma Labs

Modest diversification

The 3 months correlation between CLPS and Sigma is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CLPS Inc and Sigma Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigma Labs 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 Sigma Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigma Labs has no effect on the direction of CLPS i.e., CLPS and Sigma Labs go up and down completely randomly.

Pair Corralation between CLPS and Sigma Labs

Given the investment horizon of 90 days CLPS Inc is expected to generate 0.47 times more return on investment than Sigma Labs. However, CLPS Inc is 2.12 times less risky than Sigma Labs. It trades about 0.03 of its potential returns per unit of risk. Sigma Labs is currently generating about -0.09 per unit of risk. If you would invest  95.00  in CLPS Inc on October 5, 2024 and sell it today you would earn a total of  21.01  from holding CLPS Inc or generate 22.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.0%
Values	Daily Returns

CLPS Inc  vs.  Sigma Labs

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Sigma Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sigma Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Sigma Labs is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with CLPS and Sigma Labs

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

The idea behind CLPS Inc and Sigma Labs 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.