Correlation Between CPR Gomu and Pico Public

Can any of the company-specific risk be diversified away by investing in both CPR Gomu and Pico 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 CPR Gomu and Pico Public 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 Pico Public, you can compare the effects of market volatilities on CPR Gomu and Pico 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 CPR Gomu with a short position of Pico Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPR Gomu and Pico Public.

Diversification Opportunities for CPR Gomu and Pico Public

0.65

Correlation Coefficient

CPR Gomu  Pico Public

Poor diversification

The 3 months correlation between CPR and Pico is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Pico Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pico Public 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 Pico Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pico Public has no effect on the direction of CPR Gomu i.e., CPR Gomu and Pico Public go up and down completely randomly.

Pair Corralation between CPR Gomu and Pico Public

Assuming the 90 days trading horizon CPR Gomu Industrial is expected to generate 0.79 times more return on investment than Pico Public. However, CPR Gomu Industrial is 1.27 times less risky than Pico Public. It trades about -0.02 of its potential returns per unit of risk. Pico Public is currently generating about -0.02 per unit of risk. If you would invest  278.00  in CPR Gomu Industrial on April 25, 2025 and sell it today you would lose (8.00) from holding CPR Gomu Industrial or give up 2.88% of portfolio value over 90 days.

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

CPR Gomu Industrial  vs.  Pico Public

CPR Gomu Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPR Gomu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CPR Gomu is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pico Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pico Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pico Public 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 Pico Public

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

The idea behind CPR Gomu Industrial and Pico 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.