Correlation Between Cloudflare and Immersion

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

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

Diversification Opportunities for Cloudflare and Immersion

-0.35

Correlation Coefficient

Cloudflare  Immersion

Very good diversification

The 3 months correlation between Cloudflare and Immersion is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Immersion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immersion and Cloudflare 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 Cloudflare are associated (or correlated) with Immersion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immersion has no effect on the direction of Cloudflare i.e., Cloudflare and Immersion go up and down completely randomly.

Pair Corralation between Cloudflare and Immersion

Considering the 90-day investment horizon Cloudflare is expected to generate 1.05 times more return on investment than Immersion. However, Cloudflare is 1.05 times more volatile than Immersion. It trades about 0.17 of its potential returns per unit of risk. Immersion is currently generating about -0.01 per unit of risk. If you would invest  15,752  in Cloudflare on May 17, 2025 and sell it today you would earn a total of  3,786  from holding Cloudflare or generate 24.04% return on investment over 90 days.

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

Cloudflare  vs.  Immersion

Cloudflare

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Immersion

Risk-Adjusted Performance

Weakest

Over the last 90 days Immersion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Immersion is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cloudflare and Immersion

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

The idea behind Cloudflare and Immersion 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.

Check out your portfolio center.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.