Correlation Between Canlan Ice and ClearOne

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

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

Diversification Opportunities for Canlan Ice and ClearOne

-0.26

Correlation Coefficient

Canlan Ice  ClearOne

Very good diversification

The 3 months correlation between Canlan and ClearOne is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of Canlan Ice i.e., Canlan Ice and ClearOne go up and down completely randomly.

Pair Corralation between Canlan Ice and ClearOne

Assuming the 90 days horizon Canlan Ice is expected to generate 2.79 times less return on investment than ClearOne. But when comparing it to its historical volatility, Canlan Ice Sports is 22.81 times less risky than ClearOne. It trades about 0.18 of its potential returns per unit of risk. ClearOne is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  59.00  in ClearOne on September 21, 2024 and sell it today you would earn a total of  0.60  from holding ClearOne or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Canlan Ice Sports  vs.  ClearOne

Canlan Ice Sports

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canlan Ice Sports are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ClearOne

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, ClearOne is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Canlan Ice and ClearOne

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

The idea behind Canlan Ice Sports and ClearOne 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.