Correlation Between CLST Holdings and Malaga Financial

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

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

Diversification Opportunities for CLST Holdings and Malaga Financial

-0.29

Correlation Coefficient

CLST Holdings  Malaga Financial

Very good diversification

The 3 months correlation between CLST and Malaga is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CLST Holdings and Malaga Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malaga Financial and CLST Holdings 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 CLST Holdings are associated (or correlated) with Malaga Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malaga Financial has no effect on the direction of CLST Holdings i.e., CLST Holdings and Malaga Financial go up and down completely randomly.

Pair Corralation between CLST Holdings and Malaga Financial

Given the investment horizon of 90 days CLST Holdings is expected to generate 69.29 times more return on investment than Malaga Financial. However, CLST Holdings is 69.29 times more volatile than Malaga Financial. It trades about 0.38 of its potential returns per unit of risk. Malaga Financial is currently generating about -0.42 per unit of risk. If you would invest  2.10  in CLST Holdings on October 26, 2024 and sell it today you would earn a total of  7.89  from holding CLST Holdings or generate 375.71% return on investment over 90 days.

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

CLST Holdings  vs.  Malaga Financial

CLST Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CLST Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, CLST Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Malaga Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Malaga Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CLST Holdings and Malaga Financial

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

The idea behind CLST Holdings and Malaga Financial 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.