Correlation Between LOral SA and CleanGo Innovations

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

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

Diversification Opportunities for LOral SA and CleanGo Innovations

-0.03

Correlation Coefficient

LOral SA  CleanGo Innovations

Good diversification

The 3 months correlation between LOral and CleanGo is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding LOral SA and CleanGo Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanGo Innovations and LOral SA 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 LOral SA are associated (or correlated) with CleanGo Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanGo Innovations has no effect on the direction of LOral SA i.e., LOral SA and CleanGo Innovations go up and down completely randomly.

Pair Corralation between LOral SA and CleanGo Innovations

Assuming the 90 days horizon LOral SA is expected to generate 0.36 times more return on investment than CleanGo Innovations. However, LOral SA is 2.79 times less risky than CleanGo Innovations. It trades about 0.05 of its potential returns per unit of risk. CleanGo Innovations is currently generating about -0.24 per unit of risk. If you would invest  35,479  in LOral SA on October 25, 2024 and sell it today you would earn a total of  521.00  from holding LOral SA or generate 1.47% return on investment over 90 days.

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

LOral SA  vs.  CleanGo Innovations

LOral SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOral SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CleanGo Innovations

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanGo Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with LOral SA and CleanGo Innovations

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

The idea behind LOral SA and CleanGo Innovations 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.