Correlation Between CLS Holdings and MPX International

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

By analyzing existing cross correlation between CLS Holdings USA and MPX International Corp, you can compare the effects of market volatilities on CLS Holdings and MPX International 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 CLS Holdings with a short position of MPX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLS Holdings and MPX International.

Diversification Opportunities for CLS Holdings and MPX International

-0.09

Correlation Coefficient

CLS Holdings  MPX International

Good diversification

The 3 months correlation between CLS and MPX is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and MPX International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPX International Corp and CLS 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 CLS Holdings USA are associated (or correlated) with MPX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPX International Corp has no effect on the direction of CLS Holdings i.e., CLS Holdings and MPX International go up and down completely randomly.

Pair Corralation between CLS Holdings and MPX International

Given the investment horizon of 90 days CLS Holdings is expected to generate 47.67 times less return on investment than MPX International. But when comparing it to its historical volatility, CLS Holdings USA is 11.74 times less risky than MPX International. It trades about 0.05 of its potential returns per unit of risk. MPX International Corp is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.01  in MPX International Corp on September 12, 2024 and sell it today you would earn a total of  0.01  from holding MPX International Corp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

CLS Holdings USA  vs.  MPX International Corp

CLS Holdings USA

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MPX International Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MPX International Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MPX International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLS Holdings and MPX International

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

The idea behind CLS Holdings USA and MPX International Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..