Correlation Between CVW CleanTech and McChip Resources

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

By analyzing existing cross correlation between CVW CleanTech and McChip Resources, you can compare the effects of market volatilities on CVW CleanTech and McChip Resources 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 McChip Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and McChip Resources.

Diversification Opportunities for CVW CleanTech and McChip Resources

0.19

Correlation Coefficient

CVW CleanTech  McChip Resources

Average diversification

The 3 months correlation between CVW and McChip is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and McChip Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McChip Resources 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 McChip Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McChip Resources has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and McChip Resources go up and down completely randomly.

Pair Corralation between CVW CleanTech and McChip Resources

Assuming the 90 days horizon CVW CleanTech is expected to generate 0.96 times more return on investment than McChip Resources. However, CVW CleanTech is 1.04 times less risky than McChip Resources. It trades about 0.03 of its potential returns per unit of risk. McChip Resources is currently generating about -0.02 per unit of risk. If you would invest  75.00  in CVW CleanTech on October 12, 2024 and sell it today you would earn a total of  9.00  from holding CVW CleanTech or generate 12.0% return on investment over 90 days.

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

CVW CleanTech  vs.  McChip Resources

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

McChip Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McChip Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CVW CleanTech and McChip Resources

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

The idea behind CVW CleanTech and McChip Resources 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.