Correlation Between IMPERIAL TOBACCO and CVW CLEANTECH
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and CVW CLEANTECH 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 IMPERIAL TOBACCO and CVW CLEANTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and CVW CLEANTECH INC, you can compare the effects of market volatilities on IMPERIAL TOBACCO and CVW CLEANTECH 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 IMPERIAL TOBACCO with a short position of CVW CLEANTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and CVW CLEANTECH.
Diversification Opportunities for IMPERIAL TOBACCO and CVW CLEANTECH
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between IMPERIAL and CVW is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and CVW CLEANTECH go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and CVW CLEANTECH
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.68 times more return on investment than CVW CLEANTECH. However, IMPERIAL TOBACCO is 1.46 times less risky than CVW CLEANTECH. It trades about 0.57 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.16 per unit of risk. If you would invest 2,729 in IMPERIAL TOBACCO on August 30, 2024 and sell it today you would earn a total of 422.00 from holding IMPERIAL TOBACCO or generate 15.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. CVW CLEANTECH INC
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| CVW CLEANTECH INC |
IMPERIAL TOBACCO and CVW CLEANTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and CVW CLEANTECH
The main advantage of trading using opposite IMPERIAL TOBACCO and CVW CLEANTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, CVW CLEANTECH 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 CVW CLEANTECH will offset losses from the drop in CVW CLEANTECH's long position.| IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Apple Inc | IMPERIAL TOBACCO vs. Superior Plus Corp | IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB |
| CVW CLEANTECH vs. NXP Semiconductors NV | CVW CLEANTECH vs. Singapore Airlines Limited | CVW CLEANTECH vs. Lion One Metals | CVW CLEANTECH vs. Taiwan Semiconductor Manufacturing |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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