Correlation Between CSE Global and Alternet Systems

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

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

Diversification Opportunities for CSE Global and Alternet Systems

-0.26

Correlation Coefficient

CSE Global  Alternet Systems

Very good diversification

The 3 months correlation between CSE and Alternet is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and Alternet Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternet Systems and CSE Global 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 CSE Global Limited are associated (or correlated) with Alternet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternet Systems has no effect on the direction of CSE Global i.e., CSE Global and Alternet Systems go up and down completely randomly.

Pair Corralation between CSE Global and Alternet Systems

Assuming the 90 days horizon CSE Global Limited is expected to generate 0.65 times more return on investment than Alternet Systems. However, CSE Global Limited is 1.54 times less risky than Alternet Systems. It trades about 0.07 of its potential returns per unit of risk. Alternet Systems is currently generating about -0.05 per unit of risk. If you would invest  35.00  in CSE Global Limited on December 20, 2024 and sell it today you would earn a total of  4.00  from holding CSE Global Limited or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.83%
Values	Daily Returns

CSE Global Limited  vs.  Alternet Systems

CSE Global Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, CSE Global reported solid returns over the last few months and may actually be approaching a breakup point.

Alternet Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alternet Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with CSE Global and Alternet Systems

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

The idea behind CSE Global Limited and Alternet Systems 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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.