Correlation Between Simulated Environmen and CLST Holdings

Can any of the company-specific risk be diversified away by investing in both Simulated Environmen and CLST Holdings 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 Simulated Environmen and CLST Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Simulated Environmen and CLST Holdings

0.8

Correlation Coefficient

Simulated Environmen  CLST Holdings

Very poor diversification

The 3 months correlation between Simulated and CLST is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simulated Environmen and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings and Simulated Environmen 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 Simulated Environmen are associated (or correlated) with CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of Simulated Environmen i.e., Simulated Environmen and CLST Holdings go up and down completely randomly.

Pair Corralation between Simulated Environmen and CLST Holdings

Given the investment horizon of 90 days Simulated Environmen is expected to generate 0.5 times more return on investment than CLST Holdings. However, Simulated Environmen is 2.0 times less risky than CLST Holdings. It trades about -0.05 of its potential returns per unit of risk. CLST Holdings is currently generating about -0.05 per unit of risk. If you would invest  0.73  in Simulated Environmen on September 11, 2024 and sell it today you would lose (0.33) from holding Simulated Environmen or give up 45.21% of portfolio value over 90 days.

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

Simulated Environmen  vs.  CLST Holdings

Simulated Environmen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simulated Environmen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

CLST Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Simulated Environmen and CLST Holdings

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

The idea behind Simulated Environmen and CLST Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.