Correlation Between Cadence Design and CLST Holdings

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

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

Diversification Opportunities for Cadence Design and CLST Holdings

-0.25

Correlation Coefficient

Cadence Design  CLST Holdings

Very good diversification

The 3 months correlation between Cadence and CLST is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings and Cadence Design 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 Cadence Design Systems are associated (or correlated) with CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of Cadence Design i.e., Cadence Design and CLST Holdings go up and down completely randomly.

Pair Corralation between Cadence Design and CLST Holdings

Given the investment horizon of 90 days Cadence Design Systems is expected to under-perform the CLST Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Cadence Design Systems is 15.95 times less risky than CLST Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The CLST Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2.10  in CLST Holdings on December 19, 2024 and sell it today you would earn a total of  1.40  from holding CLST Holdings or generate 66.67% return on investment over 90 days.

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

Cadence Design Systems  vs.  CLST Holdings

Cadence Design Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cadence Design Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CLST Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CLST Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, CLST Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cadence Design and CLST Holdings

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

The idea behind Cadence Design Systems and CLST Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.