Correlation Between Aeris Environmental and Close Loop

Can any of the company-specific risk be diversified away by investing in both Aeris Environmental and Close Loop 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 Aeris Environmental and Close Loop into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aeris Environmental and Close The Loop, you can compare the effects of market volatilities on Aeris Environmental and Close Loop 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 Aeris Environmental with a short position of Close Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeris Environmental and Close Loop.

Diversification Opportunities for Aeris Environmental and Close Loop

0.61

Correlation Coefficient

Aeris Environmental  Close Loop

Poor diversification

The 3 months correlation between Aeris and Close is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Environmental and Close The Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close The Loop and Aeris Environmental 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 Aeris Environmental are associated (or correlated) with Close Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close The Loop has no effect on the direction of Aeris Environmental i.e., Aeris Environmental and Close Loop go up and down completely randomly.

Pair Corralation between Aeris Environmental and Close Loop

Assuming the 90 days trading horizon Aeris Environmental is expected to generate 0.71 times more return on investment than Close Loop. However, Aeris Environmental is 1.41 times less risky than Close Loop. It trades about -0.12 of its potential returns per unit of risk. Close The Loop is currently generating about -0.23 per unit of risk. If you would invest  8.20  in Aeris Environmental on December 20, 2024 and sell it today you would lose (2.40) from holding Aeris Environmental or give up 29.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Aeris Environmental  vs.  Close The Loop

Aeris Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeris Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Close The Loop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Close The Loop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Aeris Environmental and Close Loop

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

The idea behind Aeris Environmental and Close The Loop 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.