Correlation Between Hackett and CSP

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

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

Diversification Opportunities for Hackett and CSP

0.55

Correlation Coefficient

Hackett  CSP

Very weak diversification

The 3 months correlation between Hackett and CSP is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Hackett 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 The Hackett Group are associated (or correlated) with CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Hackett i.e., Hackett and CSP go up and down completely randomly.

Pair Corralation between Hackett and CSP

Given the investment horizon of 90 days Hackett is expected to generate 1.1 times less return on investment than CSP. But when comparing it to its historical volatility, The Hackett Group is 1.52 times less risky than CSP. It trades about 0.12 of its potential returns per unit of risk. CSP Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,356  in CSP Inc on September 1, 2024 and sell it today you would earn a total of  269.00  from holding CSP Inc or generate 19.84% return on investment over 90 days.

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

The Hackett Group  vs.  CSP Inc

Hackett Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

CSP Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 7 (%) 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.

Pair Trading with Hackett and CSP

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

The idea behind The Hackett Group and CSP 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.