Correlation Between Digimarc and CSP

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

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

Diversification Opportunities for Digimarc and CSP

-0.05

Correlation Coefficient

Digimarc  CSP

Good diversification

The 3 months correlation between Digimarc and CSP is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and CSP go up and down completely randomly.

Pair Corralation between Digimarc and CSP

Given the investment horizon of 90 days Digimarc is expected to generate 0.76 times more return on investment than CSP. However, Digimarc is 1.32 times less risky than CSP. It trades about 0.08 of its potential returns per unit of risk. CSP Inc is currently generating about -0.08 per unit of risk. If you would invest  1,122  in Digimarc on April 20, 2025 and sell it today you would earn a total of  151.00  from holding Digimarc or generate 13.46% return on investment over 90 days.

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

Digimarc  vs.  CSP Inc

Digimarc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Digimarc exhibited solid returns over the last few months and may actually be approaching a breakup point.

CSP Inc

Risk-Adjusted Performance

Very Weak

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 August 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Digimarc and CSP

The main advantage of trading using opposite Digimarc and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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 Digimarc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.