Correlation Between Public Service and CLP Holdings
Can any of the company-specific risk be diversified away by investing in both Public Service and CLP Holdings 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 Public Service and CLP Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Service Enterprise and CLP Holdings, you can compare the effects of market volatilities on Public Service and CLP Holdings 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 Public Service with a short position of CLP Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Service and CLP Holdings.
Diversification Opportunities for Public Service and CLP Holdings
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Public and CLP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Public Service Enterprise and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings and Public Service 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 Public Service Enterprise are associated (or correlated) with CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of Public Service i.e., Public Service and CLP Holdings go up and down completely randomly.
Pair Corralation between Public Service and CLP Holdings
Considering the 90-day investment horizon Public Service Enterprise is expected to generate 0.87 times more return on investment than CLP Holdings. However, Public Service Enterprise is 1.14 times less risky than CLP Holdings. It trades about 0.09 of its potential returns per unit of risk. CLP Holdings is currently generating about 0.05 per unit of risk. If you would invest 5,637 in Public Service Enterprise on August 29, 2024 and sell it today you would earn a total of 3,814 from holding Public Service Enterprise or generate 67.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Service Enterprise vs. CLP Holdings
Performance |
| Timeline |
| Public Service Enterprise |
| CLP Holdings |
Public Service and CLP Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Service and CLP Holdings
The main advantage of trading using opposite Public Service and CLP Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Service position performs unexpectedly, CLP Holdings 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 CLP Holdings will offset losses from the drop in CLP Holdings' long position.| Public Service vs. Entergy | Public Service vs. Alliant Energy Corp | Public Service vs. Pinnacle West Capital | Public Service vs. MGE Energy |
| CLP Holdings vs. Hong Kong and | CLP Holdings vs. Power Assets Holdings | CLP Holdings vs. Swire Pacific | CLP Holdings vs. Sun Hung Kai |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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