Correlation Between Avision and Clevo

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

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

Diversification Opportunities for Avision and Clevo

0.09

Correlation Coefficient

Avision  Clevo

Significant diversification

The 3 months correlation between Avision and Clevo is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Avision and Clevo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clevo and Avision 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 Avision are associated (or correlated) with Clevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clevo has no effect on the direction of Avision i.e., Avision and Clevo go up and down completely randomly.

Pair Corralation between Avision and Clevo

Assuming the 90 days trading horizon Avision is expected to under-perform the Clevo. In addition to that, Avision is 1.29 times more volatile than Clevo Co. It trades about -0.04 of its total potential returns per unit of risk. Clevo Co is currently generating about -0.03 per unit of volatility. If you would invest  5,170  in Clevo Co on December 30, 2024 and sell it today you would lose (245.00) from holding Clevo Co or give up 4.74% of portfolio value over 90 days.

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

Avision  vs.  Clevo Co

Avision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avision has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Clevo

Risk-Adjusted Performance

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.

Pair Trading with Avision and Clevo

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

The idea behind Avision and Clevo Co 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.