Correlation Between Clean Air and Group Eleven

Can any of the company-specific risk be diversified away by investing in both Clean Air and Group Eleven 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 Clean Air and Group Eleven into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Clean Air Metals and Group Eleven Resources, you can compare the effects of market volatilities on Clean Air and Group Eleven 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 Clean Air with a short position of Group Eleven. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and Group Eleven.

Diversification Opportunities for Clean Air and Group Eleven

0.56

Correlation Coefficient

Clean Air  Group Eleven

Very weak diversification

The 3 months correlation between Clean and Group is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Group Eleven Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group Eleven Resources and Clean Air 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 Clean Air Metals are associated (or correlated) with Group Eleven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group Eleven Resources has no effect on the direction of Clean Air i.e., Clean Air and Group Eleven go up and down completely randomly.

Pair Corralation between Clean Air and Group Eleven

Assuming the 90 days horizon Clean Air Metals is expected to under-perform the Group Eleven. In addition to that, Clean Air is 2.98 times more volatile than Group Eleven Resources. It trades about -0.07 of its total potential returns per unit of risk. Group Eleven Resources is currently generating about 0.01 per unit of volatility. If you would invest  18.00  in Group Eleven Resources on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Group Eleven Resources or generate 0.0% return on investment over 90 days.

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

Clean Air Metals  vs.  Group Eleven Resources

Clean Air Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Air Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Clean Air is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Group Eleven Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Eleven Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Group Eleven 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 Clean Air and Group Eleven

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

The idea behind Clean Air Metals and Group Eleven Resources 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.