Correlation Between Albemarle Corp and CN Energy

Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and CN Energy 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 Albemarle Corp and CN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Albemarle Corp and CN Energy

0.74

Correlation Coefficient

Albemarle Corp  CN Energy

Poor diversification

The 3 months correlation between Albemarle and CNEY is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and CN Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN Energy Group and Albemarle Corp 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 Albemarle Corp are associated (or correlated) with CN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN Energy Group has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and CN Energy go up and down completely randomly.

Pair Corralation between Albemarle Corp and CN Energy

Considering the 90-day investment horizon Albemarle Corp is expected to generate 0.36 times more return on investment than CN Energy. However, Albemarle Corp is 2.74 times less risky than CN Energy. It trades about -0.2 of its potential returns per unit of risk. CN Energy Group is currently generating about -0.2 per unit of risk. If you would invest  10,221  in Albemarle Corp on December 4, 2024 and sell it today you would lose (3,005) from holding Albemarle Corp or give up 29.4% of portfolio value over 90 days.

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

Albemarle Corp  vs.  CN Energy Group

Albemarle Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albemarle Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CN Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days CN Energy Group 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Albemarle Corp and CN Energy

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

The idea behind Albemarle Corp and CN Energy Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.