Correlation Between ALL ENERGY and Professional Waste

Can any of the company-specific risk be diversified away by investing in both ALL ENERGY and Professional Waste 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 Professional Waste 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 Professional Waste Technology, you can compare the effects of market volatilities on ALL ENERGY and Professional Waste 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 Professional Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALL ENERGY and Professional Waste.

Diversification Opportunities for ALL ENERGY and Professional Waste

0.18

Correlation Coefficient

ALL ENERGY  Professional Waste

Average diversification

The 3 months correlation between ALL and Professional is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding ALL ENERGY UTILITIES and Professional Waste Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Professional Waste 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 Professional Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Professional Waste has no effect on the direction of ALL ENERGY i.e., ALL ENERGY and Professional Waste go up and down completely randomly.

Pair Corralation between ALL ENERGY and Professional Waste

Assuming the 90 days horizon ALL ENERGY UTILITIES is expected to under-perform the Professional Waste. But the stock apears to be less risky and, when comparing its historical volatility, ALL ENERGY UTILITIES is 38.51 times less risky than Professional Waste. The stock trades about -0.15 of its potential returns per unit of risk. The Professional Waste Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Professional Waste Technology on October 11, 2024 and sell it today you would lose (27.00) from holding Professional Waste Technology or give up 77.14% of portfolio value over 90 days.

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

ALL ENERGY UTILITIES  vs.  Professional Waste Technology

ALL ENERGY UTILITIES

Risk-Adjusted Performance

0 of 100

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Professional Waste

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Professional Waste Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Professional Waste disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALL ENERGY and Professional Waste

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

The idea behind ALL ENERGY UTILITIES and Professional Waste Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.