Correlation Between Chaintech Technology and Clevo

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

By analyzing existing cross correlation between Chaintech Technology Corp and Clevo Co, you can compare the effects of market volatilities on Chaintech Technology and Clevo 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 Chaintech Technology with a short position of Clevo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Clevo.

Diversification Opportunities for Chaintech Technology and Clevo

-0.19

Correlation Coefficient

Chaintech Technology  Clevo

Good diversification

The 3 months correlation between Chaintech and Clevo is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology Corp and Clevo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clevo and Chaintech Technology 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 Chaintech Technology Corp are associated (or correlated) with Clevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clevo has no effect on the direction of Chaintech Technology i.e., Chaintech Technology and Clevo go up and down completely randomly.

Pair Corralation between Chaintech Technology and Clevo

Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 1.15 times more return on investment than Clevo. However, Chaintech Technology is 1.15 times more volatile than Clevo Co. It trades about 0.07 of its potential returns per unit of risk. Clevo Co is currently generating about 0.06 per unit of risk. If you would invest  2,290  in Chaintech Technology Corp on June 22, 2024 and sell it today you would earn a total of  2,185  from holding Chaintech Technology Corp or generate 95.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Chaintech Technology Corp  vs.  Clevo Co

Chaintech Technology Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chaintech Technology Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chaintech Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Clevo

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clevo Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Clevo may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with Chaintech Technology and Clevo

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

The idea behind Chaintech Technology Corp and Clevo Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.