Correlation Between 9F and CSP
Can any of the company-specific risk be diversified away by investing in both 9F 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 9F and CSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 9F Inc and CSP Inc, you can compare the effects of market volatilities on 9F 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 9F with a short position of CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of 9F and CSP.
Diversification Opportunities for 9F and CSP
Good diversification
The 3 months correlation between 9F and CSP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding 9F Inc and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and 9F 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 9F Inc 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 9F i.e., 9F and CSP go up and down completely randomly.
Pair Corralation between 9F and CSP
Considering the 90-day investment horizon 9F Inc is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, 9F Inc is 1.11 times less risky than CSP. The stock trades about -0.14 of its potential returns per unit of risk. The CSP Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,271 in CSP Inc on August 27, 2024 and sell it today you would earn a total of 578.00 from holding CSP Inc or generate 45.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
9F Inc vs. CSP Inc
Performance |
| Timeline |
| 9F Inc |
| CSP Inc |
9F and CSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 9F and CSP
The main advantage of trading using opposite 9F and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 9F 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 9F Inc 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.| CSP vs. The Hackett Group | CSP vs. Nayax | CSP vs. Formula Systems 1985 | CSP vs. Information Services Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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