Correlation Between CPN Commercial and LH Shopping

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

By analyzing existing cross correlation between CPN Commercial Growth and LH Shopping Centers, you can compare the effects of market volatilities on CPN Commercial and LH Shopping 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 CPN Commercial with a short position of LH Shopping. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPN Commercial and LH Shopping.

Diversification Opportunities for CPN Commercial and LH Shopping

-0.56

Correlation Coefficient

CPN Commercial  LH Shopping

Excellent diversification

The 3 months correlation between CPN and LHSC is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding CPN Commercial Growth and LH Shopping Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Shopping Centers and CPN Commercial 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 CPN Commercial Growth are associated (or correlated) with LH Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Shopping Centers has no effect on the direction of CPN Commercial i.e., CPN Commercial and LH Shopping go up and down completely randomly.

Pair Corralation between CPN Commercial and LH Shopping

Assuming the 90 days trading horizon CPN Commercial Growth is expected to under-perform the LH Shopping. But the stock apears to be less risky and, when comparing its historical volatility, CPN Commercial Growth is 1.15 times less risky than LH Shopping. The stock trades about -0.06 of its potential returns per unit of risk. The LH Shopping Centers is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,110  in LH Shopping Centers on December 29, 2024 and sell it today you would earn a total of  100.00  from holding LH Shopping Centers or generate 9.01% return on investment over 90 days.

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

CPN Commercial Growth  vs.  LH Shopping Centers

CPN Commercial Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPN Commercial Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, CPN Commercial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

LH Shopping Centers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LH Shopping Centers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, LH Shopping may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CPN Commercial and LH Shopping

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

The idea behind CPN Commercial Growth and LH Shopping Centers 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.