Correlation Between CLS Holdings and Slang Worldwide

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

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

Diversification Opportunities for CLS Holdings and Slang Worldwide

-0.47

Correlation Coefficient

CLS Holdings  Slang Worldwide

Very good diversification

The 3 months correlation between CLS and Slang is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CLS Holdings USA and Slang Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slang Worldwide and CLS 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 CLS Holdings USA are associated (or correlated) with Slang Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slang Worldwide has no effect on the direction of CLS Holdings i.e., CLS Holdings and Slang Worldwide go up and down completely randomly.

Pair Corralation between CLS Holdings and Slang Worldwide

Given the investment horizon of 90 days CLS Holdings is expected to generate 3.21 times less return on investment than Slang Worldwide. But when comparing it to its historical volatility, CLS Holdings USA is 2.39 times less risky than Slang Worldwide. It trades about 0.06 of its potential returns per unit of risk. Slang Worldwide is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.94  in Slang Worldwide on September 3, 2024 and sell it today you would lose (0.63) from holding Slang Worldwide or give up 67.02% of portfolio value over 90 days.

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

CLS Holdings USA  vs.  Slang Worldwide

CLS Holdings USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLS Holdings USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, CLS Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Slang Worldwide

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Slang Worldwide are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Slang Worldwide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CLS Holdings and Slang Worldwide

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

The idea behind CLS Holdings USA and Slang Worldwide 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.

Check out your portfolio center.

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.