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

0.28

Correlation Coefficient

CSP  Cantaloupe

Modest diversification

The 3 months correlation between CSP and Cantaloupe is 0.28. 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 Inc is expected to generate 1.29 times more return on investment than Cantaloupe. However, CSP is 1.29 times more volatile than Cantaloupe. It trades about -0.02 of its potential returns per unit of risk. Cantaloupe is currently generating about -0.11 per unit of risk. If you would invest  1,685  in CSP Inc on December 29, 2024 and sell it today you would lose (150.00) from holding CSP Inc or give up 8.9% of portfolio value 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

Very Weak

Over the last 90 days CSP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Cantaloupe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cantaloupe has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.