Correlation Between Cleanaway Waste and LianDi Clean

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

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

Diversification Opportunities for Cleanaway Waste and LianDi Clean

0.0

Correlation Coefficient

Cleanaway Waste  LianDi Clean

Pay attention - limited upside

The 3 months correlation between Cleanaway and LianDi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and LianDi Clean Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LianDi Clean Technology and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with LianDi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LianDi Clean Technology has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and LianDi Clean go up and down completely randomly.

Pair Corralation between Cleanaway Waste and LianDi Clean

If you would invest  182.00  in Cleanaway Waste Management on July 15, 2024 and sell it today you would earn a total of  33.00  from holding Cleanaway Waste Management or generate 18.13% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  LianDi Clean Technology

Cleanaway Waste Mana

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Waste Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Cleanaway Waste reported solid returns over the last few months and may actually be approaching a breakup point.

LianDi Clean Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LianDi Clean Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, LianDi Clean is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cleanaway Waste and LianDi Clean

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

The idea behind Cleanaway Waste Management and LianDi Clean Technology 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.