Correlation Between CMG Cleantech and Entech SE
Can any of the company-specific risk be diversified away by investing in both CMG Cleantech and Entech SE 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 CMG Cleantech and Entech SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CMG Cleantech SA and Entech SE SAS, you can compare the effects of market volatilities on CMG Cleantech and Entech SE 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 CMG Cleantech with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and Entech SE.
Diversification Opportunities for CMG Cleantech and Entech SE
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CMG and Entech is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and Entech SE go up and down completely randomly.
Pair Corralation between CMG Cleantech and Entech SE
Assuming the 90 days trading horizon CMG Cleantech SA is expected to generate 1.68 times more return on investment than Entech SE. However, CMG Cleantech is 1.68 times more volatile than Entech SE SAS. It trades about 0.02 of its potential returns per unit of risk. Entech SE SAS is currently generating about -0.04 per unit of risk. If you would invest 149.00 in CMG Cleantech SA on August 31, 2024 and sell it today you would lose (26.00) from holding CMG Cleantech SA or give up 17.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CMG Cleantech SA vs. Entech SE SAS
Performance |
| Timeline |
| CMG Cleantech SA |
| Entech SE SAS |
CMG Cleantech and Entech SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CMG Cleantech and Entech SE
The main advantage of trading using opposite CMG Cleantech and Entech SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CMG Cleantech position performs unexpectedly, Entech SE 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 Entech SE will offset losses from the drop in Entech SE's long position.| CMG Cleantech vs. EPC Groupe | CMG Cleantech vs. Groupe Sfpi | CMG Cleantech vs. Baikowski SASU | CMG Cleantech vs. NSE SA |
| Entech SE vs. Afyren SAS | Entech SE vs. Voltalia SA | Entech SE vs. Waga Energy SA | Entech SE vs. Haffner Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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