Correlation Between CP ALL and XSpring Capital

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

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

Diversification Opportunities for CP ALL and XSpring Capital

0.62

Correlation Coefficient

CP ALL  XSpring Capital

Poor diversification

The 3 months correlation between CPALL-R and XSpring is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and XSpring Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XSpring Capital Public and CP ALL 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 CP ALL Public are associated (or correlated) with XSpring Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XSpring Capital Public has no effect on the direction of CP ALL i.e., CP ALL and XSpring Capital go up and down completely randomly.

Pair Corralation between CP ALL and XSpring Capital

Assuming the 90 days trading horizon CP ALL Public is expected to generate 0.44 times more return on investment than XSpring Capital. However, CP ALL Public is 2.27 times less risky than XSpring Capital. It trades about 0.06 of its potential returns per unit of risk. XSpring Capital Public is currently generating about -0.03 per unit of risk. If you would invest  5,800  in CP ALL Public on September 5, 2024 and sell it today you would earn a total of  575.00  from holding CP ALL Public or generate 9.91% return on investment over 90 days.

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

CP ALL Public  vs.  XSpring Capital Public

CP ALL Public

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CP ALL is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

XSpring Capital Public

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days XSpring Capital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, XSpring Capital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CP ALL and XSpring Capital

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

The idea behind CP ALL Public and XSpring Capital Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.