Correlation Between Capital Clean and Eastern
Can any of the company-specific risk be diversified away by investing in both Capital Clean and Eastern 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 Capital Clean and Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Clean Energy and Eastern Co, you can compare the effects of market volatilities on Capital Clean and Eastern 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 Capital Clean with a short position of Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Clean and Eastern.
Diversification Opportunities for Capital Clean and Eastern
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Capital and Eastern is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and Capital Clean 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 Capital Clean Energy are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Capital Clean i.e., Capital Clean and Eastern go up and down completely randomly.
Pair Corralation between Capital Clean and Eastern
Given the investment horizon of 90 days Capital Clean is expected to generate 1.46 times less return on investment than Eastern. But when comparing it to its historical volatility, Capital Clean Energy is 1.61 times less risky than Eastern. It trades about 0.08 of its potential returns per unit of risk. Eastern Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,858 in Eastern Co on September 2, 2024 and sell it today you would earn a total of 1,014 from holding Eastern Co or generate 54.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Clean Energy vs. Eastern Co
Performance |
| Timeline |
| Capital Clean Energy |
| Eastern |
Capital Clean and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Clean and Eastern
The main advantage of trading using opposite Capital Clean and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Capital Clean vs. Link Real Estate | Capital Clean vs. CapitaLand Investment Limited | Capital Clean vs. American Eagle Outfitters | Capital Clean vs. Crombie Real Estate |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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