Correlation Between CVW CleanTech and 26884ABB8

Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and 26884ABB8 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 26884ABB8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVW CleanTech and ERP OPER LTD, you can compare the effects of market volatilities on CVW CleanTech and 26884ABB8 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 26884ABB8. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and 26884ABB8.

Diversification Opportunities for CVW CleanTech and 26884ABB8

-0.04

Correlation Coefficient

CVW CleanTech  26884ABB8

Good diversification

The 3 months correlation between CVW and 26884ABB8 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and ERP OPER LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERP OPER LTD 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 26884ABB8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERP OPER LTD has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and 26884ABB8 go up and down completely randomly.

Pair Corralation between CVW CleanTech and 26884ABB8

Assuming the 90 days horizon CVW CleanTech is expected to generate 7.1 times more return on investment than 26884ABB8. However, CVW CleanTech is 7.1 times more volatile than ERP OPER LTD. It trades about 0.0 of its potential returns per unit of risk. ERP OPER LTD is currently generating about -0.14 per unit of risk. If you would invest  61.00  in CVW CleanTech on December 2, 2024 and sell it today you would lose (6.00) from holding CVW CleanTech or give up 9.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.66%
Values	Daily Returns

CVW CleanTech  vs.  ERP OPER LTD

CVW CleanTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ERP OPER LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days ERP OPER LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ERP OPER LTD investors.

Pair Trading with CVW CleanTech and 26884ABB8

The main advantage of trading using opposite CVW CleanTech and 26884ABB8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, 26884ABB8 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 26884ABB8 will offset losses from the drop in 26884ABB8's long position.

The idea behind CVW CleanTech and ERP OPER LTD 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.