Correlation Between Montana Technologies and China Clean

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

By analyzing existing cross correlation between Montana Technologies and China Clean Energy, you can compare the effects of market volatilities on Montana Technologies and China 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 Montana Technologies with a short position of China Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and China Clean.

Diversification Opportunities for Montana Technologies and China Clean

0.0

Correlation Coefficient

Montana Technologies  China Clean

Pay attention - limited upside

The 3 months correlation between Montana and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and China Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Clean Energy and Montana Technologies 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 Montana Technologies are associated (or correlated) with China Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Clean Energy has no effect on the direction of Montana Technologies i.e., Montana Technologies and China Clean go up and down completely randomly.

Pair Corralation between Montana Technologies and China Clean

If you would invest  54.00  in Montana Technologies on October 9, 2024 and sell it today you would earn a total of  93.00  from holding Montana Technologies or generate 172.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.24%
Values	Daily Returns

Montana Technologies  vs.  China Clean Energy

Montana Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward-looking indicators, Montana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

China Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, China Clean is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Montana Technologies and China Clean

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

The idea behind Montana Technologies and China 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..