Correlation Between Aztec Minerals and CVW CleanTech

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

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

Diversification Opportunities for Aztec Minerals and CVW CleanTech

-0.38

Correlation Coefficient

Aztec Minerals  CVW CleanTech

Very good diversification

The 3 months correlation between Aztec and CVW is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Aztec Minerals Corp and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Aztec Minerals 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 Aztec Minerals Corp 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 has no effect on the direction of Aztec Minerals i.e., Aztec Minerals and CVW CleanTech go up and down completely randomly.

Pair Corralation between Aztec Minerals and CVW CleanTech

Assuming the 90 days horizon Aztec Minerals Corp is expected to under-perform the CVW CleanTech. In addition to that, Aztec Minerals is 2.67 times more volatile than CVW CleanTech. It trades about -0.01 of its total potential returns per unit of risk. CVW CleanTech is currently generating about 0.01 per unit of volatility. If you would invest  85.00  in CVW CleanTech on October 26, 2024 and sell it today you would lose (1.00) from holding CVW CleanTech or give up 1.18% of portfolio value over 90 days.

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

Aztec Minerals Corp  vs.  CVW CleanTech

Aztec Minerals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CVW CleanTech 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 Aztec Minerals and CVW CleanTech

The main advantage of trading using opposite Aztec Minerals and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aztec Minerals 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 Aztec Minerals Corp and CVW CleanTech 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.