Correlation Between CPU SOFTWAREHOUSE and Safety Insurance

Can any of the company-specific risk be diversified away by investing in both CPU SOFTWAREHOUSE and Safety Insurance 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 CPU SOFTWAREHOUSE and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPU SOFTWAREHOUSE and Safety Insurance Group, you can compare the effects of market volatilities on CPU SOFTWAREHOUSE and Safety Insurance 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 CPU SOFTWAREHOUSE with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPU SOFTWAREHOUSE and Safety Insurance.

Diversification Opportunities for CPU SOFTWAREHOUSE and Safety Insurance

-0.4

Correlation Coefficient

CPU SOFTWAREHOUSE  Safety Insurance

Very good diversification

The 3 months correlation between CPU and Safety is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and Safety Insurance go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and Safety Insurance

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to under-perform the Safety Insurance. In addition to that, CPU SOFTWAREHOUSE is 2.72 times more volatile than Safety Insurance Group. It trades about -0.02 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about 0.08 per unit of volatility. If you would invest  7,267  in Safety Insurance Group on September 18, 2024 and sell it today you would earn a total of  583.00  from holding Safety Insurance Group or generate 8.02% return on investment over 90 days.

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

CPU SOFTWAREHOUSE  vs.  Safety Insurance Group

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CPU SOFTWAREHOUSE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Safety Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Safety Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CPU SOFTWAREHOUSE and Safety Insurance

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

The idea behind CPU SOFTWAREHOUSE and Safety Insurance Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.