Correlation Between Vertex and CSP

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

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

Diversification Opportunities for Vertex and CSP

0.69

Correlation Coefficient

Vertex  CSP

Poor diversification

The 3 months correlation between Vertex and CSP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vertex and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Vertex 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 Vertex 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 Vertex i.e., Vertex and CSP go up and down completely randomly.

Pair Corralation between Vertex and CSP

Given the investment horizon of 90 days Vertex is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, Vertex is 1.27 times less risky than CSP. The stock trades about -0.17 of its potential returns per unit of risk. The CSP Inc is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,596  in CSP Inc on May 11, 2025 and sell it today you would lose (503.00) from holding CSP Inc or give up 31.52% of portfolio value over 90 days.

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

Vertex  vs.  CSP Inc

Vertex

Risk-Adjusted Performance

Weakest

Over the last 90 days Vertex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady 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 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 Vertex and CSP

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