Correlation Between Canlan Ice and CVW CleanTech

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

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

Diversification Opportunities for Canlan Ice and CVW CleanTech

0.11

Correlation Coefficient

Canlan Ice  CVW CleanTech

Average diversification

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

Pair Corralation between Canlan Ice and CVW CleanTech

Assuming the 90 days trading horizon Canlan Ice Sports is expected to generate 0.63 times more return on investment than CVW CleanTech. However, Canlan Ice Sports is 1.58 times less risky than CVW CleanTech. It trades about 0.07 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.02 per unit of risk. If you would invest  382.00  in Canlan Ice Sports on September 4, 2024 and sell it today you would earn a total of  28.00  from holding Canlan Ice Sports or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Canlan Ice Sports  vs.  CVW CleanTech

Canlan Ice Sports

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Canlan Ice may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CVW CleanTech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 1 (%) 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.

Pair Trading with Canlan Ice and CVW CleanTech

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

The idea behind Canlan Ice Sports and CVW CleanTech 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 Stocks Directory module to find actively traded stocks across global markets.