Correlation Between Carefree and Cloudweb

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

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

Diversification Opportunities for Carefree and Cloudweb

0.0

Correlation Coefficient

Carefree  Cloudweb

Pay attention - limited upside

The 3 months correlation between Carefree and Cloudweb is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Carefree Group and Cloudweb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudweb and Carefree 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 Carefree Group are associated (or correlated) with Cloudweb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudweb has no effect on the direction of Carefree i.e., Carefree and Cloudweb go up and down completely randomly.

Pair Corralation between Carefree and Cloudweb

If you would invest  3.90  in Cloudweb on September 12, 2024 and sell it today you would lose (0.50) from holding Cloudweb or give up 12.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carefree Group  vs.  Cloudweb

Carefree Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cloudweb

Risk-Adjusted Performance

6 of 100

OK

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

Pair Trading with Carefree and Cloudweb

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

The idea behind Carefree Group and Cloudweb 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.