Correlation Between Clearfield and Rimini Street

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

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

Diversification Opportunities for Clearfield and Rimini Street

-0.69

Correlation Coefficient

Clearfield  Rimini Street

Excellent diversification

The 3 months correlation between Clearfield and Rimini is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Rimini Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimini Street and Clearfield 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 Clearfield are associated (or correlated) with Rimini Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimini Street has no effect on the direction of Clearfield i.e., Clearfield and Rimini Street go up and down completely randomly.

Pair Corralation between Clearfield and Rimini Street

Given the investment horizon of 90 days Clearfield is expected to under-perform the Rimini Street. But the stock apears to be less risky and, when comparing its historical volatility, Clearfield is 1.32 times less risky than Rimini Street. The stock trades about -0.13 of its potential returns per unit of risk. The Rimini Street is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  355.00  in Rimini Street on December 30, 2024 and sell it today you would lose (8.00) from holding Rimini Street or give up 2.25% of portfolio value over 90 days.

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

Clearfield  vs.  Rimini Street

Clearfield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Clearfield is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Rimini Street

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rimini Street are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Rimini Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearfield and Rimini Street

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

The idea behind Clearfield and Rimini Street 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 CEOs Directory module to screen CEOs from public companies around the world.