Correlation Between ARB IOT and CSP

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

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

Diversification Opportunities for ARB IOT and CSP

0.86

Correlation Coefficient

ARB IOT  CSP

Very poor diversification

The 3 months correlation between ARB and CSP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and ARB IOT 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 ARB IOT Group 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 ARB IOT i.e., ARB IOT and CSP go up and down completely randomly.

Pair Corralation between ARB IOT and CSP

Given the investment horizon of 90 days ARB IOT Group is expected to under-perform the CSP. In addition to that, ARB IOT is 1.11 times more volatile than CSP Inc. It trades about -0.21 of its total potential returns per unit of risk. CSP Inc is currently generating about -0.13 per unit of volatility. If you would invest  1,604  in CSP Inc on May 13, 2025 and sell it today you would lose (511.00) from holding CSP Inc or give up 31.86% of portfolio value over 90 days.

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

ARB IOT Group  vs.  CSP Inc

ARB IOT Group

Risk-Adjusted Performance

Weakest

Over the last 90 days ARB IOT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CSP Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CSP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with ARB IOT and CSP

The main advantage of trading using opposite ARB IOT and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT 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 ARB IOT Group 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.