Correlation Between KRISPY KREME and CPU SOFTWAREHOUSE
Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and CPU SOFTWAREHOUSE 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 KRISPY KREME and CPU SOFTWAREHOUSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KRISPY KREME DL 01 and CPU SOFTWAREHOUSE, you can compare the effects of market volatilities on KRISPY KREME and CPU SOFTWAREHOUSE 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 KRISPY KREME with a short position of CPU SOFTWAREHOUSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and CPU SOFTWAREHOUSE.
Diversification Opportunities for KRISPY KREME and CPU SOFTWAREHOUSE
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KRISPY and CPU is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and CPU SOFTWAREHOUSE go up and down completely randomly.
Pair Corralation between KRISPY KREME and CPU SOFTWAREHOUSE
Assuming the 90 days horizon KRISPY KREME is expected to generate 7.43 times less return on investment than CPU SOFTWAREHOUSE. In addition to that, KRISPY KREME is 1.8 times more volatile than CPU SOFTWAREHOUSE. It trades about 0.02 of its total potential returns per unit of risk. CPU SOFTWAREHOUSE is currently generating about 0.22 per unit of volatility. If you would invest 88.00 in CPU SOFTWAREHOUSE on September 2, 2024 and sell it today you would earn a total of 8.00 from holding CPU SOFTWAREHOUSE or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KRISPY KREME DL 01 vs. CPU SOFTWAREHOUSE
Performance |
| Timeline |
| KRISPY KREME DL |
| CPU SOFTWAREHOUSE |
KRISPY KREME and CPU SOFTWAREHOUSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KRISPY KREME and CPU SOFTWAREHOUSE
The main advantage of trading using opposite KRISPY KREME and CPU SOFTWAREHOUSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KRISPY KREME position performs unexpectedly, CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE will offset losses from the drop in CPU SOFTWAREHOUSE's long position.| KRISPY KREME vs. BOS BETTER ONLINE | KRISPY KREME vs. GungHo Online Entertainment | KRISPY KREME vs. CARSALESCOM | KRISPY KREME vs. Carsales |
| CPU SOFTWAREHOUSE vs. SIVERS SEMICONDUCTORS AB | CPU SOFTWAREHOUSE vs. Darden Restaurants | CPU SOFTWAREHOUSE vs. Reliance Steel Aluminum | CPU SOFTWAREHOUSE vs. Q2M Managementberatung AG |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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