Correlation Between Bion Environmental and ClearSign Combustion

Can any of the company-specific risk be diversified away by investing in both Bion Environmental and ClearSign Combustion 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 Bion Environmental and ClearSign Combustion into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Bion Environmental and ClearSign Combustion

0.03

Correlation Coefficient

Bion Environmental  ClearSign Combustion

Significant diversification

The 3 months correlation between Bion and ClearSign is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion and Bion Environmental 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 Bion Environmental Technologies are associated (or correlated) with ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Bion Environmental i.e., Bion Environmental and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Bion Environmental and ClearSign Combustion

Given the investment horizon of 90 days Bion Environmental Technologies is expected to generate 1.3 times more return on investment than ClearSign Combustion. However, Bion Environmental is 1.3 times more volatile than ClearSign Combustion. It trades about 0.01 of its potential returns per unit of risk. ClearSign Combustion is currently generating about -0.08 per unit of risk. If you would invest  21.00  in Bion Environmental Technologies on December 1, 2024 and sell it today you would lose (3.00) from holding Bion Environmental Technologies or give up 14.29% of portfolio value over 90 days.

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

Bion Environmental Technologie  vs.  ClearSign Combustion

Bion Environmental

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bion Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bion Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ClearSign Combustion

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Bion Environmental and ClearSign Combustion

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

The idea behind Bion Environmental Technologies and ClearSign Combustion 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.