Correlation Between Cumberland Pharmaceuticals and Seiko Epson

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Can any of the company-specific risk be diversified away by investing in both Cumberland Pharmaceuticals and Seiko Epson 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 Cumberland Pharmaceuticals and Seiko Epson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cumberland Pharmaceuticals and Seiko Epson, you can compare the effects of market volatilities on Cumberland Pharmaceuticals and Seiko Epson 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 Cumberland Pharmaceuticals with a short position of Seiko Epson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cumberland Pharmaceuticals and Seiko Epson.

Diversification Opportunities for Cumberland Pharmaceuticals and Seiko Epson

CumberlandSeikoDiversified AwayCumberlandSeikoDiversified Away100%
-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Cumberland and Seiko is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cumberland Pharmaceuticals and Seiko Epson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seiko Epson and Cumberland Pharmaceuticals 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 Cumberland Pharmaceuticals are associated (or correlated) with Seiko Epson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seiko Epson has no effect on the direction of Cumberland Pharmaceuticals i.e., Cumberland Pharmaceuticals and Seiko Epson go up and down completely randomly.

Pair Corralation between Cumberland Pharmaceuticals and Seiko Epson

If you would invest  259.00  in Cumberland Pharmaceuticals on November 25, 2024 and sell it today you would earn a total of  272.00  from holding Cumberland Pharmaceuticals or generate 105.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Cumberland Pharmaceuticals  vs.  Seiko Epson

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100150200250300350
JavaScript chart by amCharts 3.21.15CPIX SEKEF
       Timeline  
Cumberland Pharmaceuticals 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Cumberland Pharmaceuticals are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Cumberland Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1234567
Seiko Epson 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Seiko Epson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Seiko Epson is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb17.317.417.517.617.717.817.918

Cumberland Pharmaceuticals and Seiko Epson Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-52.41-39.26-26.1-12.940.014.2528.7443.2357.72 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15CPIX SEKEF
       Returns  

Pair Trading with Cumberland Pharmaceuticals and Seiko Epson

The main advantage of trading using opposite Cumberland Pharmaceuticals and Seiko Epson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cumberland Pharmaceuticals position performs unexpectedly, Seiko Epson 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 Seiko Epson will offset losses from the drop in Seiko Epson's long position.
The idea behind Cumberland Pharmaceuticals and Seiko Epson 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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