Correlation Between Clevo and Federal Corp
Can any of the company-specific risk be diversified away by investing in both Clevo and Federal Corp 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 Clevo and Federal Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clevo Co and Federal Corp, you can compare the effects of market volatilities on Clevo and Federal Corp 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 Clevo with a short position of Federal Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clevo and Federal Corp.
Diversification Opportunities for Clevo and Federal Corp
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clevo and Federal is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clevo Co and Federal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Corp and Clevo 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 Clevo Co are associated (or correlated) with Federal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Corp has no effect on the direction of Clevo i.e., Clevo and Federal Corp go up and down completely randomly.
Pair Corralation between Clevo and Federal Corp
Assuming the 90 days trading horizon Clevo Co is expected to generate 2.37 times more return on investment than Federal Corp. However, Clevo is 2.37 times more volatile than Federal Corp. It trades about 0.02 of its potential returns per unit of risk. Federal Corp is currently generating about -0.02 per unit of risk. If you would invest 5,620 in Clevo Co on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Clevo Co or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Clevo Co vs. Federal Corp
Performance |
| Timeline |
| Clevo |
| Federal Corp |
Clevo and Federal Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clevo and Federal Corp
The main advantage of trading using opposite Clevo and Federal Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clevo position performs unexpectedly, Federal Corp 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 Federal Corp will offset losses from the drop in Federal Corp's long position.The idea behind Clevo Co and Federal Corp 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.| Federal Corp vs. Chaintech Technology Corp | Federal Corp vs. AVerMedia Technologies | Federal Corp vs. Avision | Federal Corp vs. Clevo Co |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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