Correlation Between USCorp and CLST Holdings
Can any of the company-specific risk be diversified away by investing in both USCorp and CLST Holdings 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 USCorp and CLST Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USCorp and CLST Holdings, you can compare the effects of market volatilities on USCorp and CLST Holdings 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 USCorp with a short position of CLST Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of USCorp and CLST Holdings.
Diversification Opportunities for USCorp and CLST Holdings
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between USCorp and CLST is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding USCorp and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings and USCorp 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 USCorp are associated (or correlated) with CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of USCorp i.e., USCorp and CLST Holdings go up and down completely randomly.
Pair Corralation between USCorp and CLST Holdings
Given the investment horizon of 90 days USCorp is expected to generate 4.26 times less return on investment than CLST Holdings. But when comparing it to its historical volatility, USCorp is 2.5 times less risky than CLST Holdings. It trades about 0.22 of its potential returns per unit of risk. CLST Holdings is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2.10 in CLST Holdings on October 26, 2024 and sell it today you would earn a total of 7.89 from holding CLST Holdings or generate 375.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
USCorp vs. CLST Holdings
Performance |
| Timeline |
| USCorp |
| CLST Holdings |
USCorp and CLST Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USCorp and CLST Holdings
The main advantage of trading using opposite USCorp and CLST Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USCorp position performs unexpectedly, CLST Holdings 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 CLST Holdings will offset losses from the drop in CLST Holdings' long position.| USCorp vs. Arctic Star Exploration | USCorp vs. American Clean Resources | USCorp vs. Arras Minerals Corp | USCorp vs. American Creek Resources |
| CLST Holdings vs. Chester Mining | CLST Holdings vs. Mangazeya Mining | CLST Holdings vs. Summit Materials | CLST Holdings vs. Aldel Financial II |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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