Correlation Between EPAM Systems and CLPS
Can any of the company-specific risk be diversified away by investing in both EPAM Systems 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 EPAM Systems and CLPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and CLPS Inc, you can compare the effects of market volatilities on EPAM Systems 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 EPAM Systems with a short position of CLPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and CLPS.
Diversification Opportunities for EPAM Systems and CLPS
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EPAM and CLPS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and CLPS go up and down completely randomly.
Pair Corralation between EPAM Systems and CLPS
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the CLPS. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.43 times less risky than CLPS. The stock trades about -0.01 of its potential returns per unit of risk. The CLPS Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 90.00 in CLPS Inc on August 27, 2024 and sell it today you would earn a total of 21.00 from holding CLPS Inc or generate 23.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. CLPS Inc
Performance |
| Timeline |
| EPAM Systems |
| CLPS Inc |
EPAM Systems and CLPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and CLPS
The main advantage of trading using opposite EPAM Systems and CLPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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.| EPAM Systems vs. Concentrix | EPAM Systems vs. Gartner | EPAM Systems vs. Accenture plc | EPAM Systems vs. International Business Machines |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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