Correlation Between Cleanaway and StShine Optical

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

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

Diversification Opportunities for Cleanaway and StShine Optical

-0.32

Correlation Coefficient

Cleanaway  StShine Optical

Very good diversification

The 3 months correlation between Cleanaway and StShine is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Co and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical and Cleanaway 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 Cleanaway Co are associated (or correlated) with StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Cleanaway i.e., Cleanaway and StShine Optical go up and down completely randomly.

Pair Corralation between Cleanaway and StShine Optical

Assuming the 90 days trading horizon Cleanaway is expected to generate 11.24 times less return on investment than StShine Optical. But when comparing it to its historical volatility, Cleanaway Co is 1.88 times less risky than StShine Optical. It trades about 0.0 of its potential returns per unit of risk. StShine Optical Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18,363  in StShine Optical Co on September 22, 2024 and sell it today you would earn a total of  1,287  from holding StShine Optical Co or generate 7.01% return on investment over 90 days.

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

Cleanaway Co  vs.  StShine Optical Co

Cleanaway

Risk-Adjusted Performance

0 of 100

Very Weak

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

StShine Optical

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in StShine Optical Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, StShine Optical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cleanaway and StShine Optical

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

The idea behind Cleanaway Co and StShine Optical 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.