Correlation Between S Tech and Cleanaway
Can any of the company-specific risk be diversified away by investing in both S Tech and Cleanaway 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 S Tech and Cleanaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S Tech Corp and Cleanaway Co, you can compare the effects of market volatilities on S Tech and Cleanaway 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 S Tech with a short position of Cleanaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Tech and Cleanaway.
Diversification Opportunities for S Tech and Cleanaway
Poor diversification
The 3 months correlation between 1584 and Cleanaway is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding S Tech Corp and Cleanaway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway and S Tech 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 S Tech Corp are associated (or correlated) with Cleanaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway has no effect on the direction of S Tech i.e., S Tech and Cleanaway go up and down completely randomly.
Pair Corralation between S Tech and Cleanaway
Assuming the 90 days trading horizon S Tech Corp is expected to under-perform the Cleanaway. In addition to that, S Tech is 3.81 times more volatile than Cleanaway Co. It trades about -0.27 of its total potential returns per unit of risk. Cleanaway Co is currently generating about -0.19 per unit of volatility. If you would invest 18,350 in Cleanaway Co on August 25, 2024 and sell it today you would lose (250.00) from holding Cleanaway Co or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
S Tech Corp vs. Cleanaway Co
Performance |
| Timeline |
| S Tech Corp |
| Cleanaway |
S Tech and Cleanaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S Tech and Cleanaway
The main advantage of trading using opposite S Tech and Cleanaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Tech position performs unexpectedly, Cleanaway 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 Cleanaway will offset losses from the drop in Cleanaway's long position.| S Tech vs. Catcher Technology Co | S Tech vs. Solar Applied Materials | S Tech vs. Shin Zu Shing | S Tech vs. China Metal Products |
| Cleanaway vs. Sunny Friend Environmental | Cleanaway vs. Taiwan Secom Co | Cleanaway vs. TTET Union Corp | Cleanaway vs. ECOVE Environment Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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