Correlation Between CPN Retail and Ditto Public

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

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

Diversification Opportunities for CPN Retail and Ditto Public

0.29

Correlation Coefficient

CPN Retail  Ditto Public

Modest diversification

The 3 months correlation between CPN and Ditto is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CPN Retail Growth and Ditto Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ditto Public and CPN Retail 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 CPN Retail Growth are associated (or correlated) with Ditto Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ditto Public has no effect on the direction of CPN Retail i.e., CPN Retail and Ditto Public go up and down completely randomly.

Pair Corralation between CPN Retail and Ditto Public

Assuming the 90 days trading horizon CPN Retail Growth is expected to generate 0.57 times more return on investment than Ditto Public. However, CPN Retail Growth is 1.76 times less risky than Ditto Public. It trades about 0.03 of its potential returns per unit of risk. Ditto Public is currently generating about -0.04 per unit of risk. If you would invest  1,198  in CPN Retail Growth on September 5, 2024 and sell it today you would earn a total of  32.00  from holding CPN Retail Growth or generate 2.67% return on investment over 90 days.

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

CPN Retail Growth  vs.  Ditto Public

CPN Retail Growth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Retail Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CPN Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Ditto Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ditto Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CPN Retail and Ditto Public

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

The idea behind CPN Retail Growth and Ditto 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.