Correlation Between CSP and Cantaloupe

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

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

Diversification Opportunities for CSP and Cantaloupe

0.23

Correlation Coefficient

CSP  Cantaloupe

Modest diversification

The 3 months correlation between CSP and Cantaloupe is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and Cantaloupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantaloupe 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 Cantaloupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantaloupe has no effect on the direction of CSP i.e., CSP and Cantaloupe go up and down completely randomly.

Pair Corralation between CSP and Cantaloupe

Given the investment horizon of 90 days CSP is expected to generate 1.39 times less return on investment than Cantaloupe. In addition to that, CSP is 1.67 times more volatile than Cantaloupe. It trades about 0.04 of its total potential returns per unit of risk. Cantaloupe is currently generating about 0.09 per unit of volatility. If you would invest  908.00  in Cantaloupe on November 29, 2024 and sell it today you would earn a total of  134.00  from holding Cantaloupe or generate 14.76% return on investment over 90 days.

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

CSP Inc  vs.  Cantaloupe

CSP Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cantaloupe

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cantaloupe are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Cantaloupe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSP and Cantaloupe

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

The idea behind CSP Inc and Cantaloupe 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.