Correlation Between ALL ENERGY and ABSOLUTE CLEAN

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

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

Diversification Opportunities for ALL ENERGY and ABSOLUTE CLEAN

0.73

Correlation Coefficient

ALL ENERGY  ABSOLUTE CLEAN

Poor diversification

The 3 months correlation between ALL and ABSOLUTE is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ALL ENERGY UTILITIES and ABSOLUTE CLEAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSOLUTE CLEAN ENERGY and ALL 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 ALL ENERGY UTILITIES are associated (or correlated) with ABSOLUTE CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSOLUTE CLEAN ENERGY has no effect on the direction of ALL ENERGY i.e., ALL ENERGY and ABSOLUTE CLEAN go up and down completely randomly.

Pair Corralation between ALL ENERGY and ABSOLUTE CLEAN

Assuming the 90 days horizon ALL ENERGY UTILITIES is expected to under-perform the ABSOLUTE CLEAN. In addition to that, ALL ENERGY is 4.69 times more volatile than ABSOLUTE CLEAN ENERGY. It trades about -0.06 of its total potential returns per unit of risk. ABSOLUTE CLEAN ENERGY is currently generating about -0.05 per unit of volatility. If you would invest  130.00  in ABSOLUTE CLEAN ENERGY on November 29, 2024 and sell it today you would lose (3.00) from holding ABSOLUTE CLEAN ENERGY or give up 2.31% of portfolio value over 90 days.

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

ALL ENERGY UTILITIES  vs.  ABSOLUTE CLEAN ENERGY

ALL ENERGY UTILITIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALL ENERGY UTILITIES 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 quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ABSOLUTE CLEAN ENERGY

Risk-Adjusted Performance

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 somewhat strong fundamental drivers, ABSOLUTE CLEAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ALL ENERGY and ABSOLUTE CLEAN

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

The idea behind ALL ENERGY UTILITIES and ABSOLUTE CLEAN ENERGY 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.