Correlation Between CVW CleanTech and Celestica

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

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

Diversification Opportunities for CVW CleanTech and Celestica

-0.32

Correlation Coefficient

CVW CleanTech  Celestica

Very good diversification

The 3 months correlation between CVW and Celestica is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and CVW CleanTech 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 CVW CleanTech are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Celestica go up and down completely randomly.

Pair Corralation between CVW CleanTech and Celestica

Assuming the 90 days horizon CVW CleanTech is expected to generate 1.33 times less return on investment than Celestica. In addition to that, CVW CleanTech is 2.43 times more volatile than Celestica. It trades about 0.05 of its total potential returns per unit of risk. Celestica is currently generating about 0.16 per unit of volatility. If you would invest  2,938  in Celestica on September 14, 2024 and sell it today you would earn a total of  6,982  from holding Celestica or generate 237.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

CVW CleanTech  vs.  Celestica

CVW CleanTech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CleanTech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, CVW CleanTech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Celestica

Risk-Adjusted Performance

27 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVW CleanTech and Celestica

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

The idea behind CVW CleanTech and Celestica 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.