Correlation Between Princeton Capital and CBH

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

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

Diversification Opportunities for Princeton Capital and CBH

0.0

Correlation Coefficient

Princeton Capital  CBH

Pay attention - limited upside

The 3 months correlation between Princeton and CBH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Princeton Capital and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Princeton Capital 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 Princeton Capital are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Princeton Capital i.e., Princeton Capital and CBH go up and down completely randomly.

Pair Corralation between Princeton Capital and CBH

Given the investment horizon of 90 days Princeton Capital is expected to generate 17.76 times more return on investment than CBH. However, Princeton Capital is 17.76 times more volatile than CBH. It trades about 0.02 of its potential returns per unit of risk. CBH is currently generating about 0.07 per unit of risk. If you would invest  35.00  in Princeton Capital on September 18, 2024 and sell it today you would lose (23.00) from holding Princeton Capital or give up 65.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	85.25%
Values	Daily Returns

Princeton Capital  vs.  CBH

Princeton Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Princeton Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Princeton Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Princeton Capital and CBH

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

The idea behind Princeton Capital and CBH 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.