Correlation Between Clover Leaf and Park Ohio

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

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

Diversification Opportunities for Clover Leaf and Park Ohio

0.62

Correlation Coefficient

Clover Leaf  Park Ohio

Poor diversification

The 3 months correlation between Clover and Park is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Clover Leaf Capital and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings and Clover Leaf 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 Clover Leaf Capital are associated (or correlated) with Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of Clover Leaf i.e., Clover Leaf and Park Ohio go up and down completely randomly.

Pair Corralation between Clover Leaf and Park Ohio

Assuming the 90 days horizon Clover Leaf Capital is expected to generate 1.11 times more return on investment than Park Ohio. However, Clover Leaf is 1.11 times more volatile than Park Ohio Holdings. It trades about 0.08 of its potential returns per unit of risk. Park Ohio Holdings is currently generating about 0.03 per unit of risk. If you would invest  1,043  in Clover Leaf Capital on September 17, 2024 and sell it today you would earn a total of  386.00  from holding Clover Leaf Capital or generate 37.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.66%
Values	Daily Returns

Clover Leaf Capital  vs.  Park Ohio Holdings

Clover Leaf Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Leaf Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Clover Leaf is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Park Ohio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Ohio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Park Ohio is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Clover Leaf and Park Ohio

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

The idea behind Clover Leaf Capital and Park Ohio Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.