Correlation Between Clearfield and Tecnoglass

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

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

Diversification Opportunities for Clearfield and Tecnoglass

-0.58

Correlation Coefficient

Clearfield  Tecnoglass

Excellent diversification

The 3 months correlation between Clearfield and Tecnoglass is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Tecnoglass in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecnoglass and Clearfield 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 Clearfield are associated (or correlated) with Tecnoglass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecnoglass has no effect on the direction of Clearfield i.e., Clearfield and Tecnoglass go up and down completely randomly.

Pair Corralation between Clearfield and Tecnoglass

Given the investment horizon of 90 days Clearfield is expected to under-perform the Tecnoglass. In addition to that, Clearfield is 1.05 times more volatile than Tecnoglass. It trades about -0.08 of its total potential returns per unit of risk. Tecnoglass is currently generating about 0.19 per unit of volatility. If you would invest  6,002  in Tecnoglass on September 4, 2024 and sell it today you would earn a total of  1,993  from holding Tecnoglass or generate 33.21% return on investment over 90 days.

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

Clearfield  vs.  Tecnoglass

Clearfield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clearfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tecnoglass

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Clearfield and Tecnoglass

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

The idea behind Clearfield and Tecnoglass 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 Commodity Directory module to find actively traded commodities issued by global exchanges.