Correlation Between Black Diamond and ClearOne

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

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

Diversification Opportunities for Black Diamond and ClearOne

0.49

Correlation Coefficient

Black Diamond  ClearOne

Very weak diversification

The 3 months correlation between Black and ClearOne is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne and Black Diamond 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 Black Diamond Therapeutics are associated (or correlated) with ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of Black Diamond i.e., Black Diamond and ClearOne go up and down completely randomly.

Pair Corralation between Black Diamond and ClearOne

Given the investment horizon of 90 days Black Diamond is expected to generate 16.38 times less return on investment than ClearOne. But when comparing it to its historical volatility, Black Diamond Therapeutics is 1.49 times less risky than ClearOne. It trades about 0.01 of its potential returns per unit of risk. ClearOne is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  49.00  in ClearOne on September 18, 2024 and sell it today you would earn a total of  5.80  from holding ClearOne or generate 11.84% return on investment over 90 days.

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

Black Diamond Therapeutics  vs.  ClearOne

Black Diamond Therap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ClearOne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ClearOne is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Black Diamond and ClearOne

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

The idea behind Black Diamond Therapeutics and ClearOne 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.