Correlation Between ClearOne and Wialan Technologies

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

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

Diversification Opportunities for ClearOne and Wialan Technologies

0.64

Correlation Coefficient

ClearOne  Wialan Technologies

Poor diversification

The 3 months correlation between ClearOne and Wialan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ClearOne and Wialan Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wialan Technologies and ClearOne 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 ClearOne are associated (or correlated) with Wialan Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wialan Technologies has no effect on the direction of ClearOne i.e., ClearOne and Wialan Technologies go up and down completely randomly.

Pair Corralation between ClearOne and Wialan Technologies

Given the investment horizon of 90 days ClearOne is expected to generate 1.28 times less return on investment than Wialan Technologies. In addition to that, ClearOne is 1.16 times more volatile than Wialan Technologies. It trades about 0.06 of its total potential returns per unit of risk. Wialan Technologies is currently generating about 0.08 per unit of volatility. If you would invest  0.08  in Wialan Technologies on December 29, 2024 and sell it today you would earn a total of  0.02  from holding Wialan Technologies or generate 25.0% return on investment over 90 days.

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

ClearOne  vs.  Wialan Technologies

ClearOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ClearOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Wialan Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wialan Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Wialan Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearOne and Wialan Technologies

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

The idea behind ClearOne and Wialan Technologies 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.