Correlation Between East Africa and Carbon Energy
Can any of the company-specific risk be diversified away by investing in both East Africa and Carbon Energy 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 East Africa and Carbon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Carbon Energy, you can compare the effects of market volatilities on East Africa and Carbon Energy 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 East Africa with a short position of Carbon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Carbon Energy.
Diversification Opportunities for East Africa and Carbon Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between East and Carbon is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Carbon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Energy and East Africa 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 East Africa Metals are associated (or correlated) with Carbon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Energy has no effect on the direction of East Africa i.e., East Africa and Carbon Energy go up and down completely randomly.
Pair Corralation between East Africa and Carbon Energy
If you would invest 25.00 in Carbon Energy on August 23, 2024 and sell it today you would earn a total of 0.00 from holding Carbon Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Africa Metals vs. Carbon Energy
Performance |
| Timeline |
| East Africa Metals |
| Carbon Energy |
East Africa and Carbon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Carbon Energy
The main advantage of trading using opposite East Africa and Carbon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Carbon Energy 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 Carbon Energy will offset losses from the drop in Carbon Energy's long position.| East Africa vs. Syrah Resources Limited | East Africa vs. Nouveau Monde Graphite | East Africa vs. Small Cap Core | East Africa vs. Morningstar Unconstrained Allocation |
| Carbon Energy vs. East Africa Metals | Carbon Energy vs. ABIVAX Socit Anonyme | Carbon Energy vs. SCOR PK | Carbon Energy vs. HUMANA INC |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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