Correlation Between CSP and Accenture Plc

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

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

Diversification Opportunities for CSP and Accenture Plc

0.22

Correlation Coefficient

CSP  Accenture Plc

Modest diversification

The 3 months correlation between CSP and Accenture is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and CSP 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 CSP Inc are associated (or correlated) with Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of CSP i.e., CSP and Accenture Plc go up and down completely randomly.

Pair Corralation between CSP and Accenture Plc

Given the investment horizon of 90 days CSP Inc is expected to generate 4.72 times more return on investment than Accenture Plc. However, CSP is 4.72 times more volatile than Accenture plc. It trades about 0.08 of its potential returns per unit of risk. Accenture plc is currently generating about -0.09 per unit of risk. If you would invest  1,023  in CSP Inc on January 31, 2024 and sell it today you would earn a total of  363.00  from holding CSP Inc or generate 35.48% return on investment over 90 days.

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

CSP Inc  vs.  Accenture plc

CSP Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Accenture plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accenture plc 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 fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with CSP and Accenture Plc

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

The idea behind CSP Inc and Accenture plc 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.