Correlation Between CPL Group and Boutique Newcity

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

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

Diversification Opportunities for CPL Group and Boutique Newcity

0.46

Correlation Coefficient

CPL Group  Boutique Newcity

Very weak diversification

The 3 months correlation between CPL and Boutique is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CPL Group Public and Boutique Newcity Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boutique Newcity Public and CPL Group 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 CPL Group Public are associated (or correlated) with Boutique Newcity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boutique Newcity Public has no effect on the direction of CPL Group i.e., CPL Group and Boutique Newcity go up and down completely randomly.

Pair Corralation between CPL Group and Boutique Newcity

Assuming the 90 days trading horizon CPL Group Public is expected to under-perform the Boutique Newcity. But the stock apears to be less risky and, when comparing its historical volatility, CPL Group Public is 1.13 times less risky than Boutique Newcity. The stock trades about -0.19 of its potential returns per unit of risk. The Boutique Newcity Public is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,840  in Boutique Newcity Public on September 15, 2024 and sell it today you would lose (230.00) from holding Boutique Newcity Public or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CPL Group Public  vs.  Boutique Newcity Public

CPL Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPL Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Boutique Newcity Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boutique Newcity Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with CPL Group and Boutique Newcity

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

The idea behind CPL Group Public and Boutique Newcity Public 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.