Correlation Between CVW CLEANTECH and PETCO HEALTH

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

By analyzing existing cross correlation between CVW CLEANTECH INC and PETCO HEALTH CLA, you can compare the effects of market volatilities on CVW CLEANTECH and PETCO HEALTH 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 PETCO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CLEANTECH and PETCO HEALTH.

Diversification Opportunities for CVW CLEANTECH and PETCO HEALTH

0.43

Correlation Coefficient

CVW CLEANTECH  PETCO HEALTH

Very weak diversification

The 3 months correlation between CVW and PETCO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CVW CLEANTECH INC and PETCO HEALTH CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETCO HEALTH CLA 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 INC are associated (or correlated) with PETCO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETCO HEALTH CLA has no effect on the direction of CVW CLEANTECH i.e., CVW CLEANTECH and PETCO HEALTH go up and down completely randomly.

Pair Corralation between CVW CLEANTECH and PETCO HEALTH

Assuming the 90 days trading horizon CVW CLEANTECH INC is expected to generate 0.77 times more return on investment than PETCO HEALTH. However, CVW CLEANTECH INC is 1.31 times less risky than PETCO HEALTH. It trades about 0.08 of its potential returns per unit of risk. PETCO HEALTH CLA is currently generating about 0.04 per unit of risk. If you would invest  55.00  in CVW CLEANTECH INC on April 23, 2025 and sell it today you would earn a total of  9.00  from holding CVW CLEANTECH INC or generate 16.36% return on investment over 90 days.

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

CVW CLEANTECH INC  vs.  PETCO HEALTH CLA

CVW CLEANTECH INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, CVW CLEANTECH reported solid returns over the last few months and may actually be approaching a breakup point.

PETCO HEALTH CLA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PETCO HEALTH CLA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PETCO HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CVW CLEANTECH and PETCO HEALTH

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

The idea behind CVW CLEANTECH INC and PETCO HEALTH CLA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.