Correlation Between Carnegie Clean and Advent Technologies
Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and Advent Technologies 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 Carnegie Clean and Advent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carnegie Clean Energy and Advent Technologies Holdings, you can compare the effects of market volatilities on Carnegie Clean and Advent Technologies 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 Carnegie Clean with a short position of Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Advent Technologies.
Diversification Opportunities for Carnegie Clean and Advent Technologies
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carnegie and Advent is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies and Carnegie 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 Carnegie Clean Energy are associated (or correlated) with Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Advent Technologies go up and down completely randomly.
Pair Corralation between Carnegie Clean and Advent Technologies
Assuming the 90 days horizon Carnegie Clean Energy is expected to generate 8.83 times more return on investment than Advent Technologies. However, Carnegie Clean is 8.83 times more volatile than Advent Technologies Holdings. It trades about 0.09 of its potential returns per unit of risk. Advent Technologies Holdings is currently generating about 0.0 per unit of risk. If you would invest 5.75 in Carnegie Clean Energy on August 27, 2024 and sell it today you would lose (2.96) from holding Carnegie Clean Energy or give up 51.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Carnegie Clean Energy vs. Advent Technologies Holdings
Performance |
| Timeline |
| Carnegie Clean Energy |
| Advent Technologies |
Carnegie Clean and Advent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carnegie Clean and Advent Technologies
The main advantage of trading using opposite Carnegie Clean and Advent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carnegie Clean position performs unexpectedly, Advent Technologies 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 Advent Technologies will offset losses from the drop in Advent Technologies' long position.The idea behind Carnegie Clean Energy and Advent Technologies Holdings 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.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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