Correlation Between Spring Valley and CNB

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

By analyzing existing cross correlation between Spring Valley Acquisition and CNB Corporation, you can compare the effects of market volatilities on Spring Valley and CNB 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 Spring Valley with a short position of CNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and CNB.

Diversification Opportunities for Spring Valley and CNB

0.12

Correlation Coefficient

Spring Valley  CNB

Average diversification

The 3 months correlation between Spring and CNB is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and CNB Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNB Corporation and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with CNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNB Corporation has no effect on the direction of Spring Valley i.e., Spring Valley and CNB go up and down completely randomly.

Pair Corralation between Spring Valley and CNB

Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.95 times more return on investment than CNB. However, Spring Valley Acquisition is 1.05 times less risky than CNB. It trades about 0.01 of its potential returns per unit of risk. CNB Corporation is currently generating about -0.25 per unit of risk. If you would invest  1,122  in Spring Valley Acquisition on September 15, 2024 and sell it today you would earn a total of  1.00  from holding Spring Valley Acquisition or generate 0.09% return on investment over 90 days.

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

Spring Valley Acquisition  vs.  CNB Corp.

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CNB Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNB Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Spring Valley and CNB

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

The idea behind Spring Valley Acquisition and CNB Corporation 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.