Correlation Between CK Power and ABSOLUTE CLEAN
Can any of the company-specific risk be diversified away by investing in both CK Power and ABSOLUTE 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 CK Power and ABSOLUTE CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CK Power Public and ABSOLUTE CLEAN ENERGY, you can compare the effects of market volatilities on CK Power and ABSOLUTE 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 CK Power with a short position of ABSOLUTE CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CK Power and ABSOLUTE CLEAN.
Diversification Opportunities for CK Power and ABSOLUTE CLEAN
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CKP and ABSOLUTE is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CK Power Public and ABSOLUTE CLEAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSOLUTE CLEAN ENERGY and CK Power 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 CK Power Public are associated (or correlated) with ABSOLUTE CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSOLUTE CLEAN ENERGY has no effect on the direction of CK Power i.e., CK Power and ABSOLUTE CLEAN go up and down completely randomly.
Pair Corralation between CK Power and ABSOLUTE CLEAN
Assuming the 90 days trading horizon CK Power Public is expected to generate 0.26 times more return on investment than ABSOLUTE CLEAN. However, CK Power Public is 3.79 times less risky than ABSOLUTE CLEAN. It trades about -0.19 of its potential returns per unit of risk. ABSOLUTE CLEAN ENERGY is currently generating about -0.22 per unit of risk. If you would invest 364.00 in CK Power Public on August 29, 2024 and sell it today you would lose (26.00) from holding CK Power Public or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CK Power Public vs. ABSOLUTE CLEAN ENERGY
Performance |
| Timeline |
| CK Power Public |
| ABSOLUTE CLEAN ENERGY |
CK Power and ABSOLUTE CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CK Power and ABSOLUTE CLEAN
The main advantage of trading using opposite CK Power and ABSOLUTE CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CK Power position performs unexpectedly, ABSOLUTE 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 ABSOLUTE CLEAN will offset losses from the drop in ABSOLUTE CLEAN's long position.The idea behind CK Power Public and ABSOLUTE CLEAN ENERGY 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.| ABSOLUTE CLEAN vs. Absolute Clean Energy | ABSOLUTE CLEAN vs. Super Energy | ABSOLUTE CLEAN vs. TPI Polene Power | ABSOLUTE CLEAN vs. CK Power Public |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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