Correlation Between Aker Carbon and Energy Recovery
Can any of the company-specific risk be diversified away by investing in both Aker Carbon and Energy Recovery 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 Aker Carbon and Energy Recovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Carbon Capture and Energy Recovery, you can compare the effects of market volatilities on Aker Carbon and Energy Recovery 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 Aker Carbon with a short position of Energy Recovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Energy Recovery.
Diversification Opportunities for Aker Carbon and Energy Recovery
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aker and Energy is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Energy Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Recovery and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Energy Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Recovery has no effect on the direction of Aker Carbon i.e., Aker Carbon and Energy Recovery go up and down completely randomly.
Pair Corralation between Aker Carbon and Energy Recovery
Assuming the 90 days horizon Aker Carbon Capture is expected to under-perform the Energy Recovery. In addition to that, Aker Carbon is 1.62 times more volatile than Energy Recovery. It trades about -0.01 of its total potential returns per unit of risk. Energy Recovery is currently generating about -0.01 per unit of volatility. If you would invest 2,141 in Energy Recovery on October 20, 2024 and sell it today you would lose (664.00) from holding Energy Recovery or give up 31.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aker Carbon Capture vs. Energy Recovery
Performance |
| Timeline |
| Aker Carbon Capture |
| Energy Recovery |
Aker Carbon and Energy Recovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Carbon and Energy Recovery
The main advantage of trading using opposite Aker Carbon and Energy Recovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, Energy Recovery 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 Energy Recovery will offset losses from the drop in Energy Recovery's long position.| Aker Carbon vs. CO2 Solutions | Aker Carbon vs. LifeQuest World | Aker Carbon vs. TOMI Environmental Solutions | Aker Carbon vs. Zurn Elkay Water |
| Energy Recovery vs. Zurn Elkay Water | Energy Recovery vs. CECO Environmental Corp | Energy Recovery vs. 374Water Common Stock | Energy Recovery vs. Federal Signal |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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