Correlation Between Clevo and Chaintech Technology
Can any of the company-specific risk be diversified away by investing in both Clevo and Chaintech Technology 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 Chaintech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clevo Co and Chaintech Technology Corp, you can compare the effects of market volatilities on Clevo and Chaintech Technology 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 Chaintech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clevo and Chaintech Technology.
Diversification Opportunities for Clevo and Chaintech Technology
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clevo and Chaintech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Clevo Co and Chaintech Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaintech Technology 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 Chaintech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaintech Technology Corp has no effect on the direction of Clevo i.e., Clevo and Chaintech Technology go up and down completely randomly.
Pair Corralation between Clevo and Chaintech Technology
Assuming the 90 days trading horizon Clevo is expected to generate 7.07 times less return on investment than Chaintech Technology. But when comparing it to its historical volatility, Clevo Co is 1.41 times less risky than Chaintech Technology. It trades about 0.02 of its potential returns per unit of risk. Chaintech Technology Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,355 in Chaintech Technology Corp on November 3, 2024 and sell it today you would earn a total of 135.00 from holding Chaintech Technology Corp or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clevo Co vs. Chaintech Technology Corp
Performance |
| Timeline |
| Clevo |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chaintech Technology Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Clevo and Chaintech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clevo and Chaintech Technology
The main advantage of trading using opposite Clevo and Chaintech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clevo position performs unexpectedly, Chaintech Technology 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 Chaintech Technology will offset losses from the drop in Chaintech Technology's long position.The idea behind Clevo Co and Chaintech Technology 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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