Correlation Between Finansa Public and CPL Group

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

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

Diversification Opportunities for Finansa Public and CPL Group

0.8

Correlation Coefficient

Finansa Public  CPL Group

Very poor diversification

The 3 months correlation between Finansa and CPL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Finansa Public and CPL Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPL Group Public and Finansa Public 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 Finansa Public are associated (or correlated) with CPL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPL Group Public has no effect on the direction of Finansa Public i.e., Finansa Public and CPL Group go up and down completely randomly.

Pair Corralation between Finansa Public and CPL Group

Assuming the 90 days trading horizon Finansa Public is expected to under-perform the CPL Group. But the stock apears to be less risky and, when comparing its historical volatility, Finansa Public is 1.65 times less risky than CPL Group. The stock trades about -0.26 of its potential returns per unit of risk. The CPL Group Public is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  115.00  in CPL Group Public on December 29, 2024 and sell it today you would lose (28.00) from holding CPL Group Public or give up 24.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Finansa Public  vs.  CPL Group Public

Finansa Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Finansa Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CPL Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPL Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Finansa Public and CPL Group

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

The idea behind Finansa Public and CPL Group Public 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.