Correlation Between CVW CleanTech and Apple

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

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

Diversification Opportunities for CVW CleanTech and Apple

0.46

Correlation Coefficient

CVW CleanTech  Apple

Very weak diversification

The 3 months correlation between CVW and Apple is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Apple go up and down completely randomly.

Pair Corralation between CVW CleanTech and Apple

Assuming the 90 days horizon CVW CleanTech is expected to generate 2.54 times more return on investment than Apple. However, CVW CleanTech is 2.54 times more volatile than Apple Inc CDR. It trades about 0.05 of its potential returns per unit of risk. Apple Inc CDR is currently generating about -0.37 per unit of risk. If you would invest  86.00  in CVW CleanTech on October 21, 2024 and sell it today you would earn a total of  2.00  from holding CVW CleanTech or generate 2.33% return on investment over 90 days.

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

CVW CleanTech  vs.  Apple Inc CDR

CVW CleanTech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, CVW CleanTech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apple Inc CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apple Inc CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Apple is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CVW CleanTech and Apple

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

The idea behind CVW CleanTech and Apple Inc CDR 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.