Correlation Between CPN Retail and President Bakery

Can any of the company-specific risk be diversified away by investing in both CPN Retail and President Bakery 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 President Bakery 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 President Bakery Public, you can compare the effects of market volatilities on CPN Retail and President Bakery 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 President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPN Retail and President Bakery.

Diversification Opportunities for CPN Retail and President Bakery

0.09

Correlation Coefficient

CPN Retail  President Bakery

Significant diversification

The 3 months correlation between CPN and President is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CPN Retail Growth and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery 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 President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of CPN Retail i.e., CPN Retail and President Bakery go up and down completely randomly.

Pair Corralation between CPN Retail and President Bakery

Assuming the 90 days trading horizon CPN Retail Growth is expected to generate 2.1 times more return on investment than President Bakery. However, CPN Retail is 2.1 times more volatile than President Bakery Public. It trades about 0.03 of its potential returns per unit of risk. President Bakery Public is currently generating about 0.0 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	Insignificant
Accuracy	98.41%
Values	Daily Returns

CPN Retail Growth  vs.  President Bakery 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.

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CPN Retail and President Bakery

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

The idea behind CPN Retail Growth and President Bakery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .