Correlation Between ClearSign Combustion and Iveda Solutions

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

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

Diversification Opportunities for ClearSign Combustion and Iveda Solutions

0.75

Correlation Coefficient

ClearSign Combustion  Iveda Solutions

Poor diversification

The 3 months correlation between ClearSign and Iveda is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Iveda Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iveda Solutions and ClearSign Combustion 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 ClearSign Combustion are associated (or correlated) with Iveda Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iveda Solutions has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Iveda Solutions go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Iveda Solutions

Given the investment horizon of 90 days ClearSign Combustion is expected to generate 1.96 times less return on investment than Iveda Solutions. But when comparing it to its historical volatility, ClearSign Combustion is 2.12 times less risky than Iveda Solutions. It trades about 0.2 of its potential returns per unit of risk. Iveda Solutions is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Iveda Solutions on October 21, 2024 and sell it today you would earn a total of  127.00  from holding Iveda Solutions or generate 43.05% return on investment over 90 days.

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

ClearSign Combustion  vs.  Iveda Solutions

ClearSign Combustion

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Iveda Solutions

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Iveda Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearSign Combustion and Iveda Solutions

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

The idea behind ClearSign Combustion and Iveda Solutions 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.