Correlation Between CPR Gomu and Forth Public

Can any of the company-specific risk be diversified away by investing in both CPR Gomu and Forth Public 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 CPR Gomu and Forth Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CPR Gomu and Forth Public

-0.47

Correlation Coefficient

CPR Gomu  Forth Public

Very good diversification

The 3 months correlation between CPR and Forth is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Forth Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forth Public and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with Forth Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forth Public has no effect on the direction of CPR Gomu i.e., CPR Gomu and Forth Public go up and down completely randomly.

Pair Corralation between CPR Gomu and Forth Public

Assuming the 90 days trading horizon CPR Gomu Industrial is expected to generate 0.98 times more return on investment than Forth Public. However, CPR Gomu Industrial is 1.02 times less risky than Forth Public. It trades about 0.07 of its potential returns per unit of risk. Forth Public is currently generating about -0.14 per unit of risk. If you would invest  316.00  in CPR Gomu Industrial on September 13, 2024 and sell it today you would earn a total of  30.00  from holding CPR Gomu Industrial or generate 9.49% return on investment over 90 days.

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

CPR Gomu Industrial  vs.  Forth Public

CPR Gomu Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPR Gomu Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, CPR Gomu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Forth Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forth 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 fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CPR Gomu and Forth Public

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

The idea behind CPR Gomu Industrial and Forth 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.