Correlation Between CVW CleanTech and SGS SA
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and SGS SA 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 SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and SGS SA, you can compare the effects of market volatilities on CVW CleanTech and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and SGS SA.
Diversification Opportunities for CVW CleanTech and SGS SA
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CVW and SGS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and SGS SA go up and down completely randomly.
Pair Corralation between CVW CleanTech and SGS SA
Assuming the 90 days horizon CVW CleanTech is expected to generate 0.7 times more return on investment than SGS SA. However, CVW CleanTech is 1.43 times less risky than SGS SA. It trades about 0.18 of its potential returns per unit of risk. SGS SA is currently generating about -0.21 per unit of risk. If you would invest 59.00 in CVW CleanTech on September 5, 2024 and sell it today you would earn a total of 2.00 from holding CVW CleanTech or generate 3.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. SGS SA
Performance |
| Timeline |
| CVW CleanTech |
| SGS SA |
CVW CleanTech and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and SGS SA
The main advantage of trading using opposite CVW CleanTech and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| CVW CleanTech vs. Acco Brands | CVW CleanTech vs. Coursera | CVW CleanTech vs. Peoples Educational Holdings | CVW CleanTech vs. Universal Technical Institute |
| SGS SA vs. CVW CleanTech | SGS SA vs. The Hanover Insurance | SGS SA vs. Pekin Life Insurance | SGS SA vs. Ecoloclean Industrs |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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