Correlation Between BRC and CRPT

Can any of the company-specific risk be diversified away by investing in both BRC and CRPT 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 BRC and CRPT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BRC and CRPT, you can compare the effects of market volatilities on BRC and CRPT 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 BRC with a short position of CRPT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and CRPT.

Diversification Opportunities for BRC and CRPT

-0.07

Correlation Coefficient

BRC  CRPT

Good diversification

The 3 months correlation between BRC and CRPT is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BRC and CRPT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRPT and BRC 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 BRC are associated (or correlated) with CRPT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRPT has no effect on the direction of BRC i.e., BRC and CRPT go up and down completely randomly.

Pair Corralation between BRC and CRPT

If you would invest  1.70  in CRPT on September 2, 2024 and sell it today you would lose (0.14) from holding CRPT or give up 8.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.52%
Values	Daily Returns

BRC  vs.  CRPT

BRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BRC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

CRPT

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRPT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, CRPT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BRC and CRPT

The main advantage of trading using opposite BRC and CRPT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, CRPT 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 CRPT will offset losses from the drop in CRPT's long position.

The idea behind BRC and CRPT 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.