Correlation Between Cleanaway and Amazing Microelectronic

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

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

Diversification Opportunities for Cleanaway and Amazing Microelectronic

0.3

Correlation Coefficient

Cleanaway  Amazing Microelectronic

Weak diversification

The 3 months correlation between Cleanaway and Amazing is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Co and Amazing Microelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazing Microelectronic and Cleanaway 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 Cleanaway Co are associated (or correlated) with Amazing Microelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazing Microelectronic has no effect on the direction of Cleanaway i.e., Cleanaway and Amazing Microelectronic go up and down completely randomly.

Pair Corralation between Cleanaway and Amazing Microelectronic

Assuming the 90 days trading horizon Cleanaway Co is expected to under-perform the Amazing Microelectronic. But the stock apears to be less risky and, when comparing its historical volatility, Cleanaway Co is 2.4 times less risky than Amazing Microelectronic. The stock trades about -0.04 of its potential returns per unit of risk. The Amazing Microelectronic is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,220  in Amazing Microelectronic on September 12, 2024 and sell it today you would earn a total of  530.00  from holding Amazing Microelectronic or generate 5.75% return on investment over 90 days.

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

Cleanaway Co  vs.  Amazing Microelectronic

Cleanaway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cleanaway is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Amazing Microelectronic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amazing Microelectronic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Amazing Microelectronic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cleanaway and Amazing Microelectronic

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

The idea behind Cleanaway Co and Amazing Microelectronic 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.