Correlation Between Aker Carbon and Greenlane Renewables

Can any of the company-specific risk be diversified away by investing in both Aker Carbon and Greenlane Renewables 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 Aker Carbon and Greenlane Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aker Carbon Capture and Greenlane Renewables, you can compare the effects of market volatilities on Aker Carbon and Greenlane Renewables 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 Aker Carbon with a short position of Greenlane Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Greenlane Renewables.

Diversification Opportunities for Aker Carbon and Greenlane Renewables

0.01

Correlation Coefficient

Aker Carbon  Greenlane Renewables

Significant diversification

The 3 months correlation between Aker and Greenlane is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of Aker Carbon i.e., Aker Carbon and Greenlane Renewables go up and down completely randomly.

Pair Corralation between Aker Carbon and Greenlane Renewables

Assuming the 90 days horizon Aker Carbon Capture is expected to under-perform the Greenlane Renewables. In addition to that, Aker Carbon is 1.6 times more volatile than Greenlane Renewables. It trades about -0.03 of its total potential returns per unit of risk. Greenlane Renewables is currently generating about 0.07 per unit of volatility. If you would invest  6.50  in Greenlane Renewables on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Greenlane Renewables or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Aker Carbon Capture  vs.  Greenlane Renewables

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Greenlane Renewables

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenlane Renewables are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Greenlane Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aker Carbon and Greenlane Renewables

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

The idea behind Aker Carbon Capture and Greenlane Renewables 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 CEOs Directory module to screen CEOs from public companies around the world.