Correlation Between Clean Energy and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Clean Energy and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on Clean Energy and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Energy and China BlueChemical.
Diversification Opportunities for Clean Energy and China BlueChemical
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Clean and China is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Clean Energy i.e., Clean Energy and China BlueChemical go up and down completely randomly.
Pair Corralation between Clean Energy and China BlueChemical
Assuming the 90 days horizon Clean Energy Fuels is expected to generate 0.94 times more return on investment than China BlueChemical. However, Clean Energy Fuels is 1.07 times less risky than China BlueChemical. It trades about 0.2 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.14 per unit of risk. If you would invest 246.00 in Clean Energy Fuels on October 24, 2024 and sell it today you would earn a total of 30.00 from holding Clean Energy Fuels or generate 12.2% 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. China BlueChemical
Performance |
| Timeline |
| Clean Energy Fuels |
| China BlueChemical |
Clean Energy and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Energy and China BlueChemical
The main advantage of trading using opposite Clean Energy and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Energy position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| Clean Energy vs. Beazer Homes USA | Clean Energy vs. CITY OFFICE REIT | Clean Energy vs. PKSHA TECHNOLOGY INC | Clean Energy vs. VELA TECHNOLPLC LS 0001 |
| China BlueChemical vs. Clean Energy Fuels | China BlueChemical vs. Texas Roadhouse | China BlueChemical vs. Gaztransport Technigaz SA | China BlueChemical vs. Commercial Vehicle Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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