Correlation Between Widepoint and CSP

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

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

Diversification Opportunities for Widepoint and CSP

-0.24

Correlation Coefficient

Widepoint  CSP

Very good diversification

The 3 months correlation between Widepoint and CSP is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Widepoint C and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Widepoint 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 Widepoint C 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 Widepoint i.e., Widepoint and CSP go up and down completely randomly.

Pair Corralation between Widepoint and CSP

Considering the 90-day investment horizon Widepoint C is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, Widepoint C is 1.16 times less risky than CSP. The stock trades about -0.08 of its potential returns per unit of risk. The CSP Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,619  in CSP Inc on November 28, 2024 and sell it today you would lose (50.00) from holding CSP Inc or give up 3.09% of portfolio value over 90 days.

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

Widepoint C  vs.  CSP Inc

Widepoint C

Risk-Adjusted Performance

Very Weak

Over the last 90 days Widepoint C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CSP Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, CSP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Widepoint and CSP

The main advantage of trading using opposite Widepoint and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Widepoint 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 Widepoint C 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.