Correlation Between Sigma Labs and CLPS

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

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

Diversification Opportunities for Sigma Labs and CLPS

0.25

Correlation Coefficient

Sigma Labs  CLPS

Modest diversification

The 3 months correlation between Sigma and CLPS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Labs and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc and Sigma Labs 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 Sigma Labs are associated (or correlated) with CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of Sigma Labs i.e., Sigma Labs and CLPS go up and down completely randomly.

Pair Corralation between Sigma Labs and CLPS

Given the investment horizon of 90 days Sigma Labs is expected to under-perform the CLPS. In addition to that, Sigma Labs is 1.92 times more volatile than CLPS Inc. It trades about -0.08 of its total potential returns per unit of risk. CLPS Inc is currently generating about 0.01 per unit of volatility. If you would invest  147.00  in CLPS Inc on October 5, 2024 and sell it today you would lose (31.00) from holding CLPS Inc or give up 21.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	26.52%
Values	Daily Returns

Sigma Labs  vs.  CLPS Inc

Sigma Labs

Risk-Adjusted Performance

0 of 100

Very Weak

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

CLPS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Sigma Labs and CLPS

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

The idea behind Sigma Labs and CLPS 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.