Correlation Between Cass Information and Smart Powerr

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

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

Diversification Opportunities for Cass Information and Smart Powerr

-0.6

Correlation Coefficient

Cass Information  Smart Powerr

Excellent diversification

The 3 months correlation between Cass and Smart is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Smart Powerr Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Powerr Corp and Cass Information 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 Cass Information Systems are associated (or correlated) with Smart Powerr. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Powerr Corp has no effect on the direction of Cass Information i.e., Cass Information and Smart Powerr go up and down completely randomly.

Pair Corralation between Cass Information and Smart Powerr

Given the investment horizon of 90 days Cass Information Systems is expected to generate 0.39 times more return on investment than Smart Powerr. However, Cass Information Systems is 2.57 times less risky than Smart Powerr. It trades about 0.07 of its potential returns per unit of risk. Smart Powerr Corp is currently generating about -0.04 per unit of risk. If you would invest  4,185  in Cass Information Systems on August 31, 2024 and sell it today you would earn a total of  275.00  from holding Cass Information Systems or generate 6.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Cass Information Systems  vs.  Smart Powerr Corp

Cass Information Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Smart Powerr Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Powerr Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Cass Information and Smart Powerr

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

The idea behind Cass Information Systems and Smart Powerr Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.