Correlation Between CVW CLEANTECH and Hongkong

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

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

Diversification Opportunities for CVW CLEANTECH and Hongkong

0.63

Correlation Coefficient

CVW CLEANTECH  Hongkong

Poor diversification

The 3 months correlation between CVW and Hongkong is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and The Hongkong and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hongkong and CVW CLEANTECH 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 CVW CLEANTECH INC are associated (or correlated) with Hongkong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hongkong has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and Hongkong go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and Hongkong

Assuming the 90 days trading horizon CVW CLEANTECH is expected to generate 3.26 times less return on investment than Hongkong. In addition to that, CVW CLEANTECH is 1.32 times more volatile than The Hongkong and. It trades about 0.02 of its total potential returns per unit of risk. The Hongkong and is currently generating about 0.11 per unit of volatility. If you would invest  65.00  in The Hongkong and on October 23, 2024 and sell it today you would earn a total of  8.00  from holding The Hongkong and or generate 12.31% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  The Hongkong and

CVW CLEANTECH INC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable 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.

The Hongkong

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hongkong and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Hongkong reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CLEANTECH and Hongkong

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

The idea behind CVW CLEANTECH INC and The Hongkong and 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.