Correlation Between CVW CleanTech and Solid Impact

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Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Solid Impact 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 Solid Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Solid Impact Investments, you can compare the effects of market volatilities on CVW CleanTech and Solid Impact 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 Solid Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Solid Impact.

Diversification Opportunities for CVW CleanTech and Solid Impact

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CVW and Solid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Solid Impact Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Impact Investments 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 are associated (or correlated) with Solid Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Impact Investments has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Solid Impact go up and down completely randomly.

Pair Corralation between CVW CleanTech and Solid Impact

Assuming the 90 days horizon CVW CleanTech is expected to generate 1.6 times more return on investment than Solid Impact. However, CVW CleanTech is 1.6 times more volatile than Solid Impact Investments. It trades about 0.0 of its potential returns per unit of risk. Solid Impact Investments is currently generating about -0.04 per unit of risk. If you would invest  120.00  in CVW CleanTech on November 29, 2024 and sell it today you would lose (40.00) from holding CVW CleanTech or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CVW CleanTech  vs.  Solid Impact Investments

 Performance 
       Timeline  
CVW CleanTech 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Solid Impact Investments 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Solid Impact Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Solid Impact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CVW CleanTech and Solid Impact Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CVW CleanTech and Solid Impact

The main advantage of trading using opposite CVW CleanTech and Solid Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Solid Impact 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 Solid Impact will offset losses from the drop in Solid Impact's long position.
The idea behind CVW CleanTech and Solid Impact Investments 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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