Correlation Between CHRYSALIS INVESTMENTS and CVW CLEANTECH

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

By analyzing existing cross correlation between CHRYSALIS INVESTMENTS LTD and CVW CLEANTECH INC, you can compare the effects of market volatilities on CHRYSALIS INVESTMENTS and CVW CLEANTECH 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 CHRYSALIS INVESTMENTS with a short position of CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRYSALIS INVESTMENTS and CVW CLEANTECH.

Diversification Opportunities for CHRYSALIS INVESTMENTS and CVW CLEANTECH

0.61

Correlation Coefficient

CHRYSALIS INVESTMENTS  CVW CLEANTECH

Poor diversification

The 3 months correlation between CHRYSALIS and CVW is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHRYSALIS INVESTMENTS LTD and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC and CHRYSALIS INVESTMENTS 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 CHRYSALIS INVESTMENTS LTD are associated (or correlated) with CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of CHRYSALIS INVESTMENTS i.e., CHRYSALIS INVESTMENTS and CVW CLEANTECH go up and down completely randomly.

Pair Corralation between CHRYSALIS INVESTMENTS and CVW CLEANTECH

Assuming the 90 days horizon CHRYSALIS INVESTMENTS is expected to generate 1.01 times less return on investment than CVW CLEANTECH. But when comparing it to its historical volatility, CHRYSALIS INVESTMENTS LTD is 1.7 times less risky than CVW CLEANTECH. It trades about 0.03 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  71.00  in CVW CLEANTECH INC on October 10, 2024 and sell it today you would lose (12.00) from holding CVW CLEANTECH INC or give up 16.9% of portfolio value over 90 days.

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

CHRYSALIS INVESTMENTS LTD  vs.  CVW CLEANTECH INC

CHRYSALIS INVESTMENTS LTD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHRYSALIS INVESTMENTS LTD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CHRYSALIS INVESTMENTS reported solid returns over the last few months and may actually be approaching a breakup point.

CVW CLEANTECH INC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady fundamental indicators, CVW CLEANTECH reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHRYSALIS INVESTMENTS and CVW CLEANTECH

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

The idea behind CHRYSALIS INVESTMENTS LTD and CVW CLEANTECH 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 Anywhere module to track or share privately all of your investments from the convenience of any device.