Correlation Between CPR Gomu and Central Retail

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

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

Diversification Opportunities for CPR Gomu and Central Retail

0.59

Correlation Coefficient

CPR Gomu  Central Retail

Very weak diversification

The 3 months correlation between CPR and Central is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of CPR Gomu i.e., CPR Gomu and Central Retail go up and down completely randomly.

Pair Corralation between CPR Gomu and Central Retail

Assuming the 90 days trading horizon CPR Gomu Industrial is expected to generate 2.95 times more return on investment than Central Retail. However, CPR Gomu is 2.95 times more volatile than Central Retail. It trades about 0.2 of its potential returns per unit of risk. Central Retail is currently generating about 0.08 per unit of risk. If you would invest  289.00  in CPR Gomu Industrial on September 15, 2024 and sell it today you would earn a total of  49.00  from holding CPR Gomu Industrial or generate 16.96% return on investment over 90 days.

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

CPR Gomu Industrial  vs.  Central Retail

CPR Gomu Industrial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CPR Gomu Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, CPR Gomu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Central Retail

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Central Retail 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 CPR Gomu and Central Retail

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

The idea behind CPR Gomu Industrial and Central Retail 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.