Correlation Between CPL Group and Eastern Commercial

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

By analyzing existing cross correlation between CPL Group Public and Eastern Commercial Leasing, you can compare the effects of market volatilities on CPL Group and Eastern Commercial 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 CPL Group with a short position of Eastern Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPL Group and Eastern Commercial.

Diversification Opportunities for CPL Group and Eastern Commercial

0.45

Correlation Coefficient

CPL Group  Eastern Commercial

Very weak diversification

The 3 months correlation between CPL and Eastern is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CPL Group Public and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and CPL Group 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 CPL Group Public are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of CPL Group i.e., CPL Group and Eastern Commercial go up and down completely randomly.

Pair Corralation between CPL Group and Eastern Commercial

Assuming the 90 days trading horizon CPL Group Public is expected to under-perform the Eastern Commercial. In addition to that, CPL Group is 1.58 times more volatile than Eastern Commercial Leasing. It trades about -0.07 of its total potential returns per unit of risk. Eastern Commercial Leasing is currently generating about -0.05 per unit of volatility. If you would invest  95.00  in Eastern Commercial Leasing on December 29, 2024 and sell it today you would lose (12.00) from holding Eastern Commercial Leasing or give up 12.63% of portfolio value over 90 days.

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

CPL Group Public  vs.  Eastern Commercial Leasing

CPL Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPL Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eastern Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Commercial Leasing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with CPL Group and Eastern Commercial

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

The idea behind CPL Group Public and Eastern Commercial Leasing 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.