Correlation Between Iveda Solutions and ClearSign Combustion

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

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

Diversification Opportunities for Iveda Solutions and ClearSign Combustion

0.76

Correlation Coefficient

Iveda Solutions  ClearSign Combustion

Poor diversification

The 3 months correlation between Iveda and ClearSign is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Iveda Solutions and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion and Iveda Solutions 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 Iveda Solutions are associated (or correlated) with ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Iveda Solutions i.e., Iveda Solutions and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Iveda Solutions and ClearSign Combustion

Given the investment horizon of 90 days Iveda Solutions is expected to generate 3.26 times more return on investment than ClearSign Combustion. However, Iveda Solutions is 3.26 times more volatile than ClearSign Combustion. It trades about 0.37 of its potential returns per unit of risk. ClearSign Combustion is currently generating about 0.11 per unit of risk. If you would invest  176.00  in Iveda Solutions on October 5, 2024 and sell it today you would earn a total of  384.00  from holding Iveda Solutions or generate 218.18% return on investment over 90 days.

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

Iveda Solutions  vs.  ClearSign Combustion

Iveda Solutions

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Iveda Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental indicators, Iveda Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

ClearSign Combustion

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iveda Solutions and ClearSign Combustion

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

The idea behind Iveda Solutions and ClearSign Combustion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.