Correlation Between ABSOLUTE CLEAN and CPR Gomu

Can any of the company-specific risk be diversified away by investing in both ABSOLUTE CLEAN and CPR Gomu 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 ABSOLUTE CLEAN and CPR Gomu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ABSOLUTE CLEAN ENERGY and CPR Gomu Industrial, you can compare the effects of market volatilities on ABSOLUTE CLEAN and CPR Gomu 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 ABSOLUTE CLEAN with a short position of CPR Gomu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABSOLUTE CLEAN and CPR Gomu.

Diversification Opportunities for ABSOLUTE CLEAN and CPR Gomu

-0.8

Correlation Coefficient

ABSOLUTE CLEAN  CPR Gomu

Pay attention - limited upside

The 3 months correlation between ABSOLUTE and CPR is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding ABSOLUTE CLEAN ENERGY and CPR Gomu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPR Gomu Industrial and ABSOLUTE CLEAN 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 ABSOLUTE CLEAN ENERGY are associated (or correlated) with CPR Gomu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPR Gomu Industrial has no effect on the direction of ABSOLUTE CLEAN i.e., ABSOLUTE CLEAN and CPR Gomu go up and down completely randomly.

Pair Corralation between ABSOLUTE CLEAN and CPR Gomu

Assuming the 90 days trading horizon ABSOLUTE CLEAN ENERGY is expected to under-perform the CPR Gomu. In addition to that, ABSOLUTE CLEAN is 1.01 times more volatile than CPR Gomu Industrial. It trades about -0.11 of its total potential returns per unit of risk. CPR Gomu Industrial is currently generating about 0.11 per unit of volatility. If you would invest  284.00  in CPR Gomu Industrial on September 1, 2024 and sell it today you would earn a total of  74.00  from holding CPR Gomu Industrial or generate 26.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

ABSOLUTE CLEAN ENERGY  vs.  CPR Gomu Industrial

ABSOLUTE CLEAN ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABSOLUTE CLEAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

CPR Gomu Industrial

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CPR Gomu Industrial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, CPR Gomu disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ABSOLUTE CLEAN and CPR Gomu

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

The idea behind ABSOLUTE CLEAN ENERGY and CPR Gomu Industrial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.