Correlation Between CK Power and Clover Power

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

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

Diversification Opportunities for CK Power and Clover Power

0.81

Correlation Coefficient

CK Power  Clover Power

Very poor diversification

The 3 months correlation between CKP and Clover is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and Clover Power PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Power PCL and CK Power 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 CK Power Public are associated (or correlated) with Clover Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Power PCL has no effect on the direction of CK Power i.e., CK Power and Clover Power go up and down completely randomly.

Pair Corralation between CK Power and Clover Power

Assuming the 90 days trading horizon CK Power Public is expected to under-perform the Clover Power. But the stock apears to be less risky and, when comparing its historical volatility, CK Power Public is 24.45 times less risky than Clover Power. The stock trades about -0.03 of its potential returns per unit of risk. The Clover Power PCL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  186.00  in Clover Power PCL on October 23, 2024 and sell it today you would lose (173.00) from holding Clover Power PCL or give up 93.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

CK Power Public  vs.  Clover Power PCL

CK Power Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CK Power Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Clover Power PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Power PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CK Power and Clover Power

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

The idea behind CK Power Public and Clover Power PCL 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.