Correlation Between Dover and CVD Equipment

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

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

Diversification Opportunities for Dover and CVD Equipment

0.11

Correlation Coefficient

Dover  CVD Equipment

Average diversification

The 3 months correlation between Dover and CVD is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dover and CVD Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVD Equipment and Dover 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 Dover are associated (or correlated) with CVD Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVD Equipment has no effect on the direction of Dover i.e., Dover and CVD Equipment go up and down completely randomly.

Pair Corralation between Dover and CVD Equipment

Considering the 90-day investment horizon Dover is expected to generate 0.42 times more return on investment than CVD Equipment. However, Dover is 2.38 times less risky than CVD Equipment. It trades about -0.02 of its potential returns per unit of risk. CVD Equipment is currently generating about -0.1 per unit of risk. If you would invest  19,040  in Dover on December 26, 2024 and sell it today you would lose (466.00) from holding Dover or give up 2.45% of portfolio value over 90 days.

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

Dover  vs.  CVD Equipment

Dover

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dover has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dover is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CVD Equipment

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVD Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Dover and CVD Equipment

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

The idea behind Dover and CVD Equipment 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.