Correlation Between Clearfield and Applied Opt

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

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

Diversification Opportunities for Clearfield and Applied Opt

0.38

Correlation Coefficient

Clearfield  Applied Opt

Weak diversification

The 3 months correlation between Clearfield and Applied is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Clearfield and Applied Opt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Opt 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 Applied Opt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Opt has no effect on the direction of Clearfield i.e., Clearfield and Applied Opt go up and down completely randomly.

Pair Corralation between Clearfield and Applied Opt

Given the investment horizon of 90 days Clearfield is expected to under-perform the Applied Opt. But the stock apears to be less risky and, when comparing its historical volatility, Clearfield is 1.63 times less risky than Applied Opt. The stock trades about -0.03 of its potential returns per unit of risk. The Applied Opt is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,765  in Applied Opt on May 28, 2025 and sell it today you would earn a total of  742.00  from holding Applied Opt or generate 42.04% return on investment over 90 days.

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

Clearfield  vs.  Applied Opt

Clearfield

Risk-Adjusted Performance

Weakest

Over the last 90 days Clearfield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Applied Opt

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Opt are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Applied Opt demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearfield and Applied Opt

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

The idea behind Clearfield and Applied Opt 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.