Correlation Between EVS Broadcast and CVW CLEANTECH

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

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

Diversification Opportunities for EVS Broadcast and CVW CLEANTECH

-0.72

Correlation Coefficient

EVS Broadcast  CVW CLEANTECH

Pay attention - limited upside

The 3 months correlation between EVS and CVW is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment 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 EVS Broadcast 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 EVS Broadcast Equipment 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 EVS Broadcast i.e., EVS Broadcast and CVW CLEANTECH go up and down completely randomly.

Pair Corralation between EVS Broadcast and CVW CLEANTECH

Assuming the 90 days trading horizon EVS Broadcast Equipment is expected to generate 0.46 times more return on investment than CVW CLEANTECH. However, EVS Broadcast Equipment is 2.17 times less risky than CVW CLEANTECH. It trades about 0.25 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about -0.03 per unit of risk. If you would invest  3,070  in EVS Broadcast Equipment on December 20, 2024 and sell it today you would earn a total of  800.00  from holding EVS Broadcast Equipment or generate 26.06% return on investment over 90 days.

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

EVS Broadcast Equipment  vs.  CVW CLEANTECH INC

EVS Broadcast Equipment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVW CLEANTECH INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVW CLEANTECH INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, CVW CLEANTECH is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EVS Broadcast and CVW CLEANTECH

The main advantage of trading using opposite EVS Broadcast and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast 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 EVS Broadcast Equipment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.