Correlation Between CVW CLEANTECH and SPORTING

Can any of the company-specific risk be diversified away by investing in both CVW CLEANTECH and SPORTING 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 SPORTING 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 SPORTING, you can compare the effects of market volatilities on CVW CLEANTECH and SPORTING 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 SPORTING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and SPORTING.

Diversification Opportunities for CVW CLEANTECH and SPORTING

-0.21

Correlation Coefficient

CVW CLEANTECH  SPORTING

Very good diversification

The 3 months correlation between CVW and SPORTING is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and SPORTING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPORTING 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 SPORTING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPORTING has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and SPORTING go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and SPORTING

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 0.67 times more return on investment than SPORTING. However, CVW CLEANTECH INC is 1.5 times less risky than SPORTING. It trades about 0.04 of its potential returns per unit of risk. SPORTING is currently generating about -0.06 per unit of risk. If you would invest  56.00  in CVW CLEANTECH INC on October 6, 2024 and sell it today you would earn a total of  2.00  from holding CVW CLEANTECH INC or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.5%
Values	Daily Returns

CVW CLEANTECH INC  vs.  SPORTING

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.

SPORTING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPORTING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CVW CLEANTECH and SPORTING

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

The idea behind CVW CLEANTECH INC and SPORTING 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.