Correlation Between Clean Carbon and Kool2play
Can any of the company-specific risk be diversified away by investing in both Clean Carbon and Kool2play 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 Clean Carbon and Kool2play into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Carbon Energy and Kool2play SA, you can compare the effects of market volatilities on Clean Carbon and Kool2play 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 Clean Carbon with a short position of Kool2play. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Carbon and Kool2play.
Diversification Opportunities for Clean Carbon and Kool2play
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clean and Kool2play is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Clean Carbon Energy and Kool2play SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kool2play SA and Clean 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 Clean Carbon Energy are associated (or correlated) with Kool2play. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kool2play SA has no effect on the direction of Clean Carbon i.e., Clean Carbon and Kool2play go up and down completely randomly.
Pair Corralation between Clean Carbon and Kool2play
Assuming the 90 days trading horizon Clean Carbon Energy is expected to generate 1.81 times more return on investment than Kool2play. However, Clean Carbon is 1.81 times more volatile than Kool2play SA. It trades about 0.06 of its potential returns per unit of risk. Kool2play SA is currently generating about -0.1 per unit of risk. If you would invest 28.00 in Clean Carbon Energy on August 27, 2024 and sell it today you would earn a total of 1.00 from holding Clean Carbon Energy or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 78.95% |
| Values | Daily Returns |
Clean Carbon Energy vs. Kool2play SA
Performance |
| Timeline |
| Clean Carbon Energy |
| Kool2play SA |
Clean Carbon and Kool2play Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Carbon and Kool2play
The main advantage of trading using opposite Clean Carbon and Kool2play positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Carbon position performs unexpectedly, Kool2play 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 Kool2play will offset losses from the drop in Kool2play's long position.| Clean Carbon vs. Asseco Business Solutions | Clean Carbon vs. Detalion Games SA | Clean Carbon vs. Asseco South Eastern | Clean Carbon vs. CFI Holding SA |
| Kool2play vs. Clean Carbon Energy | Kool2play vs. ADX | Kool2play vs. Agroliga Group PLC | Kool2play vs. Vee SA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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