Correlation Between Clean Energy and Tiangong International
Can any of the company-specific risk be diversified away by investing in both Clean Energy and Tiangong International 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 Clean Energy and Tiangong International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Energy Fuels and Tiangong International, you can compare the effects of market volatilities on Clean Energy and Tiangong International 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 Clean Energy with a short position of Tiangong International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and Tiangong International.
Diversification Opportunities for Clean Energy and Tiangong International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and Tiangong is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Tiangong International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiangong International and Clean Energy 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 Clean Energy Fuels are associated (or correlated) with Tiangong International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiangong International has no effect on the direction of Clean Energy i.e., Clean Energy and Tiangong International go up and down completely randomly.
Pair Corralation between Clean Energy and Tiangong International
Assuming the 90 days horizon Clean Energy Fuels is expected to under-perform the Tiangong International. But the stock apears to be less risky and, when comparing its historical volatility, Clean Energy Fuels is 1.15 times less risky than Tiangong International. The stock trades about -0.01 of its potential returns per unit of risk. The Tiangong International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Tiangong International on September 14, 2024 and sell it today you would earn a total of 6.00 from holding Tiangong International or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Energy Fuels vs. Tiangong International
Performance |
| Timeline |
| Clean Energy Fuels |
| Tiangong International |
Clean Energy and Tiangong International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and Tiangong International
The main advantage of trading using opposite Clean Energy and Tiangong International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, Tiangong International 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 Tiangong International will offset losses from the drop in Tiangong International's long position.| Clean Energy vs. Superior Plus Corp | Clean Energy vs. SIVERS SEMICONDUCTORS AB | Clean Energy vs. Norsk Hydro ASA | Clean Energy vs. Reliance Steel Aluminum |
| Tiangong International vs. COLUMBIA SPORTSWEAR | Tiangong International vs. Clean Energy Fuels | Tiangong International vs. KOOL2PLAY SA ZY | Tiangong International vs. American Public Education |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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