Correlation Between CSP and CLPS

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

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

Diversification Opportunities for CSP and CLPS

0.64

Correlation Coefficient

CSP  CLPS

Poor diversification

The 3 months correlation between CSP and CLPS is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc and CSP 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 CSP Inc are associated (or correlated) with CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of CSP i.e., CSP and CLPS go up and down completely randomly.

Pair Corralation between CSP and CLPS

Given the investment horizon of 90 days CSP is expected to generate 1.91 times less return on investment than CLPS. In addition to that, CSP is 1.28 times more volatile than CLPS Inc. It trades about 0.02 of its total potential returns per unit of risk. CLPS Inc is currently generating about 0.04 per unit of volatility. If you would invest  113.00  in CLPS Inc on December 27, 2024 and sell it today you would earn a total of  5.00  from holding CLPS Inc or generate 4.42% return on investment over 90 days.

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

CSP Inc  vs.  CLPS Inc

CSP Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, CSP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CLPS Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CLPS Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, CLPS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CSP and CLPS

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

The idea behind CSP Inc and CLPS Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.