Correlation Between LH Shopping and CPN Retail

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

By analyzing existing cross correlation between LH Shopping Centers and CPN Retail Growth, you can compare the effects of market volatilities on LH Shopping and CPN Retail 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 LH Shopping with a short position of CPN Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of LH Shopping and CPN Retail.

Diversification Opportunities for LH Shopping and CPN Retail

0.12

Correlation Coefficient

LH Shopping  CPN Retail

Average diversification

The 3 months correlation between LHSC and CPN is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LH Shopping Centers and CPN Retail Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPN Retail Growth and LH Shopping 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 LH Shopping Centers are associated (or correlated) with CPN Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPN Retail Growth has no effect on the direction of LH Shopping i.e., LH Shopping and CPN Retail go up and down completely randomly.

Pair Corralation between LH Shopping and CPN Retail

Assuming the 90 days trading horizon LH Shopping Centers is expected to generate 0.54 times more return on investment than CPN Retail. However, LH Shopping Centers is 1.84 times less risky than CPN Retail. It trades about 0.07 of its potential returns per unit of risk. CPN Retail Growth is currently generating about -0.01 per unit of risk. If you would invest  1,115  in LH Shopping Centers on November 29, 2024 and sell it today you would earn a total of  35.00  from holding LH Shopping Centers or generate 3.14% return on investment over 90 days.

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

LH Shopping Centers  vs.  CPN Retail Growth

LH Shopping Centers

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LH Shopping Centers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, LH Shopping is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

CPN Retail Growth

Risk-Adjusted Performance

Weak

Over the last 90 days CPN Retail Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CPN Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LH Shopping and CPN Retail

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

The idea behind LH Shopping Centers and CPN Retail Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.