Correlation Between Clover Power and CP ALL

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

By analyzing existing cross correlation between Clover Power PCL and CP ALL Public, you can compare the effects of market volatilities on Clover Power and CP ALL 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 Power with a short position of CP ALL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clover Power and CP ALL.

Diversification Opportunities for Clover Power and CP ALL

0.87

Correlation Coefficient

Clover Power  CP ALL

Very poor diversification

The 3 months correlation between Clover and CPALL-R is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Clover Power PCL and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public and Clover Power 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 Power PCL are associated (or correlated) with CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of Clover Power i.e., Clover Power and CP ALL go up and down completely randomly.

Pair Corralation between Clover Power and CP ALL

Assuming the 90 days horizon Clover Power PCL is expected to generate 34.1 times more return on investment than CP ALL. However, Clover Power is 34.1 times more volatile than CP ALL Public. It trades about 0.03 of its potential returns per unit of risk. CP ALL Public is currently generating about -0.02 per unit of risk. If you would invest  189.00  in Clover Power PCL on October 21, 2024 and sell it today you would lose (176.00) from holding Clover Power PCL or give up 93.12% of portfolio value over 90 days.

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

Clover Power PCL  vs.  CP ALL Public

Clover Power PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Power PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Clover Power and CP ALL

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

The idea behind Clover Power PCL and CP ALL Public 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.