Correlation Between Aker Carbon and TOMI Environmental

Can any of the company-specific risk be diversified away by investing in both Aker Carbon and TOMI Environmental 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 TOMI Environmental 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 TOMI Environmental Solutions, you can compare the effects of market volatilities on Aker Carbon and TOMI Environmental 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 TOMI Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and TOMI Environmental.

Diversification Opportunities for Aker Carbon and TOMI Environmental

0.33

Correlation Coefficient

Aker Carbon  TOMI Environmental

Weak diversification

The 3 months correlation between Aker and TOMI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and TOMI Environmental Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOMI Environmental 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 TOMI Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOMI Environmental has no effect on the direction of Aker Carbon i.e., Aker Carbon and TOMI Environmental go up and down completely randomly.

Pair Corralation between Aker Carbon and TOMI Environmental

Assuming the 90 days horizon Aker Carbon Capture is expected to under-perform the TOMI Environmental. In addition to that, Aker Carbon is 1.75 times more volatile than TOMI Environmental Solutions. It trades about -0.06 of its total potential returns per unit of risk. TOMI Environmental Solutions is currently generating about -0.03 per unit of volatility. If you would invest  102.00  in TOMI Environmental Solutions on December 28, 2024 and sell it today you would lose (14.00) from holding TOMI Environmental Solutions or give up 13.73% of portfolio value over 90 days.

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

Aker Carbon Capture  vs.  TOMI Environmental Solutions

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.

TOMI Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOMI Environmental Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Aker Carbon and TOMI Environmental

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

The idea behind Aker Carbon Capture and TOMI Environmental Solutions 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.