Correlation Between Clevo and Chenming Mold

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

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

Diversification Opportunities for Clevo and Chenming Mold

0.01

Correlation Coefficient

Clevo  Chenming Mold

Significant diversification

The 3 months correlation between Clevo and Chenming is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Clevo Co and Chenming Mold Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chenming Mold Industrial and Clevo 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 Clevo Co are associated (or correlated) with Chenming Mold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chenming Mold Industrial has no effect on the direction of Clevo i.e., Clevo and Chenming Mold go up and down completely randomly.

Pair Corralation between Clevo and Chenming Mold

Assuming the 90 days trading horizon Clevo Co is expected to under-perform the Chenming Mold. But the stock apears to be less risky and, when comparing its historical volatility, Clevo Co is 1.35 times less risky than Chenming Mold. The stock trades about -0.01 of its potential returns per unit of risk. The Chenming Mold Industrial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  10,750  in Chenming Mold Industrial on September 17, 2024 and sell it today you would earn a total of  3,750  from holding Chenming Mold Industrial or generate 34.88% return on investment over 90 days.

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

Clevo Co  vs.  Chenming Mold Industrial

Clevo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clevo Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Clevo is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chenming Mold Industrial

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chenming Mold Industrial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chenming Mold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clevo and Chenming Mold

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

The idea behind Clevo Co and Chenming Mold Industrial 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.