Correlation Between CLST Holdings and Simulated Environmen

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

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

Diversification Opportunities for CLST Holdings and Simulated Environmen

0.8

Correlation Coefficient

CLST Holdings  Simulated Environmen

Very poor diversification

The 3 months correlation between CLST and Simulated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CLST Holdings and Simulated Environmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulated Environmen 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 Simulated Environmen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulated Environmen has no effect on the direction of CLST Holdings i.e., CLST Holdings and Simulated Environmen go up and down completely randomly.

Pair Corralation between CLST Holdings and Simulated Environmen

Given the investment horizon of 90 days CLST Holdings is expected to under-perform the Simulated Environmen. In addition to that, CLST Holdings is 1.43 times more volatile than Simulated Environmen. It trades about -0.14 of its total potential returns per unit of risk. Simulated Environmen is currently generating about 0.02 per unit of volatility. If you would invest  0.46  in Simulated Environmen on September 11, 2024 and sell it today you would lose (0.06) from holding Simulated Environmen or give up 13.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

CLST Holdings  vs.  Simulated Environmen

CLST Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLST Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Simulated Environmen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simulated Environmen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CLST Holdings and Simulated Environmen

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

The idea behind CLST Holdings and Simulated Environmen 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.