Correlation Between CVW CleanTech and ClearOne

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

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

Diversification Opportunities for CVW CleanTech and ClearOne

0.18

Correlation Coefficient

CVW CleanTech  ClearOne

Average diversification

The 3 months correlation between CVW and ClearOne is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne 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 ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and ClearOne go up and down completely randomly.

Pair Corralation between CVW CleanTech and ClearOne

Assuming the 90 days horizon CVW CleanTech is expected to generate 2.25 times less return on investment than ClearOne. But when comparing it to its historical volatility, CVW CleanTech is 1.87 times less risky than ClearOne. It trades about 0.05 of its potential returns per unit of risk. ClearOne is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  61.00  in ClearOne on December 27, 2024 and sell it today you would earn a total of  6.00  from holding ClearOne or generate 9.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

CVW CleanTech  vs.  ClearOne

CVW CleanTech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, CVW CleanTech reported solid returns over the last few months and may actually be approaching a breakup point.

ClearOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ClearOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and ClearOne

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

The idea behind CVW CleanTech and ClearOne 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.