Correlation Between IBEX and CSP

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

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

Diversification Opportunities for IBEX and CSP

-0.62

Correlation Coefficient

IBEX  CSP

Excellent diversification

The 3 months correlation between IBEX and CSP is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding IBEX and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and IBEX 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 IBEX 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 IBEX i.e., IBEX and CSP go up and down completely randomly.

Pair Corralation between IBEX and CSP

Given the investment horizon of 90 days IBEX is expected to generate 0.76 times more return on investment than CSP. However, IBEX is 1.32 times less risky than CSP. It trades about 0.15 of its potential returns per unit of risk. CSP Inc is currently generating about -0.07 per unit of risk. If you would invest  2,288  in IBEX on April 21, 2025 and sell it today you would earn a total of  675.00  from holding IBEX or generate 29.5% return on investment over 90 days.

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

IBEX  vs.  CSP Inc

IBEX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, IBEX showed 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 IBEX and CSP

The main advantage of trading using opposite IBEX and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IBEX 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 IBEX 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.