Correlation Between Verimatrix and Claranova

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

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

Diversification Opportunities for Verimatrix and Claranova

0.54

Correlation Coefficient

Verimatrix  Claranova

Very weak diversification

The 3 months correlation between Verimatrix and Claranova is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Verimatrix and Claranova SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Claranova SE and Verimatrix 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 Verimatrix are associated (or correlated) with Claranova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Claranova SE has no effect on the direction of Verimatrix i.e., Verimatrix and Claranova go up and down completely randomly.

Pair Corralation between Verimatrix and Claranova

Assuming the 90 days trading horizon Verimatrix is expected to generate 2.56 times less return on investment than Claranova. In addition to that, Verimatrix is 1.15 times more volatile than Claranova SE. It trades about 0.03 of its total potential returns per unit of risk. Claranova SE is currently generating about 0.1 per unit of volatility. If you would invest  147.00  in Claranova SE on November 29, 2024 and sell it today you would earn a total of  30.00  from holding Claranova SE or generate 20.41% return on investment over 90 days.

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

Verimatrix  vs.  Claranova SE

Verimatrix

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Verimatrix are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Verimatrix may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Claranova SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Claranova SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Claranova sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verimatrix and Claranova

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

The idea behind Verimatrix and Claranova SE 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.