Correlation Between Concentrix and CSP

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

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

Diversification Opportunities for Concentrix and CSP

-0.34

Correlation Coefficient

Concentrix  CSP

Very good diversification

The 3 months correlation between Concentrix and CSP is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Concentrix and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Concentrix 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 Concentrix are associated (or correlated) with CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Concentrix i.e., Concentrix and CSP go up and down completely randomly.

Pair Corralation between Concentrix and CSP

Given the investment horizon of 90 days Concentrix is expected to generate 0.48 times more return on investment than CSP. However, Concentrix is 2.1 times less risky than CSP. It trades about -0.25 of its potential returns per unit of risk. CSP Inc is currently generating about -0.23 per unit of risk. If you would invest  6,304  in Concentrix on January 31, 2024 and sell it today you would lose (803.00) from holding Concentrix or give up 12.74% of portfolio value over 90 days.

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

Concentrix  vs.  CSP Inc

Concentrix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concentrix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

CSP Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Concentrix and CSP

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

The idea behind Concentrix and CSP Inc 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.

Check out your portfolio center.

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.