Correlation Between Century Wind and Hi Clearance

Can any of the company-specific risk be diversified away by investing in both Century Wind and Hi Clearance 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 Century Wind and Hi Clearance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Century Wind Power and Hi Clearance, you can compare the effects of market volatilities on Century Wind and Hi Clearance 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 Century Wind with a short position of Hi Clearance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Hi Clearance.

Diversification Opportunities for Century Wind and Hi Clearance

-0.59

Correlation Coefficient

Century Wind  Hi Clearance

Excellent diversification

The 3 months correlation between Century and 1788 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Hi Clearance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Clearance and Century Wind 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 Century Wind Power are associated (or correlated) with Hi Clearance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Clearance has no effect on the direction of Century Wind i.e., Century Wind and Hi Clearance go up and down completely randomly.

Pair Corralation between Century Wind and Hi Clearance

Assuming the 90 days trading horizon Century Wind Power is expected to generate 6.22 times more return on investment than Hi Clearance. However, Century Wind is 6.22 times more volatile than Hi Clearance. It trades about 0.07 of its potential returns per unit of risk. Hi Clearance is currently generating about 0.04 per unit of risk. If you would invest  14,361  in Century Wind Power on October 24, 2024 and sell it today you would earn a total of  12,139  from holding Century Wind Power or generate 84.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.75%
Values	Daily Returns

Century Wind Power  vs.  Hi Clearance

Century Wind Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Wind Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Hi Clearance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hi Clearance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hi Clearance is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Century Wind and Hi Clearance

The main advantage of trading using opposite Century Wind and Hi Clearance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Hi Clearance 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 Hi Clearance will offset losses from the drop in Hi Clearance's long position.

The idea behind Century Wind Power and Hi Clearance 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.