Correlation Between Credit Clear and ApplyDirect

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

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

Diversification Opportunities for Credit Clear and ApplyDirect

0.11

Correlation Coefficient

Credit Clear  ApplyDirect

Average diversification

The 3 months correlation between Credit and ApplyDirect is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Credit Clear and ApplyDirect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ApplyDirect and Credit Clear 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 Credit Clear are associated (or correlated) with ApplyDirect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ApplyDirect has no effect on the direction of Credit Clear i.e., Credit Clear and ApplyDirect go up and down completely randomly.

Pair Corralation between Credit Clear and ApplyDirect

Assuming the 90 days trading horizon Credit Clear is expected to under-perform the ApplyDirect. But the stock apears to be less risky and, when comparing its historical volatility, Credit Clear is 2.12 times less risky than ApplyDirect. The stock trades about 0.0 of its potential returns per unit of risk. The ApplyDirect is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5.00  in ApplyDirect on October 23, 2024 and sell it today you would lose (0.20) from holding ApplyDirect or give up 4.0% of portfolio value over 90 days.

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

Credit Clear  vs.  ApplyDirect

Credit Clear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Clear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Credit Clear is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ApplyDirect

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ApplyDirect are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ApplyDirect may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Credit Clear and ApplyDirect

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

The idea behind Credit Clear and ApplyDirect 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.