Correlation Between Peoples Educational and CVW CleanTech

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

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

Diversification Opportunities for Peoples Educational and CVW CleanTech

0.12

Correlation Coefficient

Peoples Educational  CVW CleanTech

Average diversification

The 3 months correlation between Peoples and CVW is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Educational Holdings and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech and Peoples Educational 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 Peoples Educational Holdings 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 Peoples Educational i.e., Peoples Educational and CVW CleanTech go up and down completely randomly.

Pair Corralation between Peoples Educational and CVW CleanTech

Given the investment horizon of 90 days Peoples Educational Holdings is expected to generate 7.4 times more return on investment than CVW CleanTech. However, Peoples Educational is 7.4 times more volatile than CVW CleanTech. It trades about 0.05 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.02 per unit of risk. If you would invest  0.01  in Peoples Educational Holdings on December 2, 2024 and sell it today you would earn a total of  0.99  from holding Peoples Educational Holdings or generate 9900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.8%
Values	Daily Returns

Peoples Educational Holdings  vs.  CVW CleanTech

Peoples Educational

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peoples Educational Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Peoples Educational and CVW CleanTech

The main advantage of trading using opposite Peoples Educational and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Educational 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 Peoples Educational Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.