Correlation Between CPN Retail and Quality Houses

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

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

Diversification Opportunities for CPN Retail and Quality Houses

0.3

Correlation Coefficient

CPN Retail  Quality Houses

Weak diversification

The 3 months correlation between CPN and Quality is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding CPN Retail Growth and Quality Houses Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Property and CPN Retail 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 Retail Growth are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Property has no effect on the direction of CPN Retail i.e., CPN Retail and Quality Houses go up and down completely randomly.

Pair Corralation between CPN Retail and Quality Houses

Assuming the 90 days trading horizon CPN Retail Growth is expected to generate 2.01 times more return on investment than Quality Houses. However, CPN Retail is 2.01 times more volatile than Quality Houses Property. It trades about 0.08 of its potential returns per unit of risk. Quality Houses Property is currently generating about -0.26 per unit of risk. If you would invest  1,188  in CPN Retail Growth on September 1, 2024 and sell it today you would earn a total of  32.00  from holding CPN Retail Growth or generate 2.69% return on investment over 90 days.

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

CPN Retail Growth  vs.  Quality Houses Property

CPN Retail Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Retail Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, CPN Retail may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Quality Houses Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Houses Property are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite conflicting forward-looking signals, Quality Houses disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPN Retail and Quality Houses

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

The idea behind CPN Retail Growth and Quality Houses Property 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.