Correlation Between CPI Computer and Interwood Xylemporia
Can any of the company-specific risk be diversified away by investing in both CPI Computer and Interwood Xylemporia 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 CPI Computer and Interwood Xylemporia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Computer Peripherals and Interwood Xylemporia ATENE, you can compare the effects of market volatilities on CPI Computer and Interwood Xylemporia 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 CPI Computer with a short position of Interwood Xylemporia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Computer and Interwood Xylemporia.
Diversification Opportunities for CPI Computer and Interwood Xylemporia
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CPI and Interwood is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CPI Computer Peripherals and Interwood Xylemporia ATENE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interwood Xylemporia and CPI Computer 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 CPI Computer Peripherals are associated (or correlated) with Interwood Xylemporia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interwood Xylemporia has no effect on the direction of CPI Computer i.e., CPI Computer and Interwood Xylemporia go up and down completely randomly.
Pair Corralation between CPI Computer and Interwood Xylemporia
Assuming the 90 days trading horizon CPI Computer Peripherals is expected to generate 1.11 times more return on investment than Interwood Xylemporia. However, CPI Computer is 1.11 times more volatile than Interwood Xylemporia ATENE. It trades about 0.01 of its potential returns per unit of risk. Interwood Xylemporia ATENE is currently generating about 0.01 per unit of risk. If you would invest 54.00 in CPI Computer Peripherals on September 12, 2024 and sell it today you would earn a total of 0.00 from holding CPI Computer Peripherals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
CPI Computer Peripherals vs. Interwood Xylemporia ATENE
Performance |
| Timeline |
| CPI Computer Peripherals |
| Interwood Xylemporia |
CPI Computer and Interwood Xylemporia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Computer and Interwood Xylemporia
The main advantage of trading using opposite CPI Computer and Interwood Xylemporia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Computer position performs unexpectedly, Interwood Xylemporia 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 Interwood Xylemporia will offset losses from the drop in Interwood Xylemporia's long position.| CPI Computer vs. Interlife General Insurance | CPI Computer vs. Profile Systems Software | CPI Computer vs. Hellenic Telecommunications Organization | CPI Computer vs. Technical Olympic SA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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