Correlation Between Identillect Technologies and CVW CleanTech

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

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

Diversification Opportunities for Identillect Technologies and CVW CleanTech

0.33

Correlation Coefficient

Identillect Technologies  CVW CleanTech

Weak diversification

The 3 months correlation between Identillect and CVW is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Identillect Technologies Corp and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Identillect Technologies 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 Identillect Technologies Corp 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 Identillect Technologies i.e., Identillect Technologies and CVW CleanTech go up and down completely randomly.

Pair Corralation between Identillect Technologies and CVW CleanTech

Given the investment horizon of 90 days Identillect Technologies Corp is expected to generate 14.13 times more return on investment than CVW CleanTech. However, Identillect Technologies is 14.13 times more volatile than CVW CleanTech. It trades about 0.14 of its potential returns per unit of risk. CVW CleanTech is currently generating about -0.07 per unit of risk. If you would invest  0.50  in Identillect Technologies Corp on December 26, 2024 and sell it today you would earn a total of  0.00  from holding Identillect Technologies Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Identillect Technologies Corp  vs.  CVW CleanTech

Identillect Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Identillect Technologies Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Identillect Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of latest abnormal 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 Identillect Technologies and CVW CleanTech

The main advantage of trading using opposite Identillect Technologies and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identillect Technologies 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 Identillect Technologies Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..