Correlation Between Clevo and Elitegroup Computer

Can any of the company-specific risk be diversified away by investing in both Clevo and Elitegroup Computer 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 Elitegroup Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clevo Co and Elitegroup Computer Systems, you can compare the effects of market volatilities on Clevo and Elitegroup Computer 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 Elitegroup Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clevo and Elitegroup Computer.

Diversification Opportunities for Clevo and Elitegroup Computer

0.77

Correlation Coefficient

Clevo  Elitegroup Computer

Poor diversification

The 3 months correlation between Clevo and Elitegroup is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Clevo Co and Elitegroup Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elitegroup Computer 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 Elitegroup Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elitegroup Computer has no effect on the direction of Clevo i.e., Clevo and Elitegroup Computer go up and down completely randomly.

Pair Corralation between Clevo and Elitegroup Computer

Assuming the 90 days trading horizon Clevo Co is expected to generate 1.14 times more return on investment than Elitegroup Computer. However, Clevo is 1.14 times more volatile than Elitegroup Computer Systems. It trades about 0.2 of its potential returns per unit of risk. Elitegroup Computer Systems is currently generating about 0.09 per unit of risk. If you would invest  3,820  in Clevo Co on March 17, 2024 and sell it today you would earn a total of  1,790  from holding Clevo Co or generate 46.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Clevo Co  vs.  Elitegroup Computer Systems

Clevo

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clevo Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Clevo showed solid returns over the last few months and may actually be approaching a breakup point.

Elitegroup Computer

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elitegroup Computer Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Elitegroup Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clevo and Elitegroup Computer

The main advantage of trading using opposite Clevo and Elitegroup Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clevo position performs unexpectedly, Elitegroup Computer 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 Elitegroup Computer will offset losses from the drop in Elitegroup Computer's long position.

The idea behind Clevo Co and Elitegroup Computer Systems 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.