Correlation Between Bravura Solutions and Carnegie Clean

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

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

Diversification Opportunities for Bravura Solutions and Carnegie Clean

-0.24

Correlation Coefficient

Bravura Solutions  Carnegie Clean

Very good diversification

The 3 months correlation between Bravura and Carnegie is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bravura Solutions and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Bravura Solutions 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 Bravura Solutions are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Bravura Solutions i.e., Bravura Solutions and Carnegie Clean go up and down completely randomly.

Pair Corralation between Bravura Solutions and Carnegie Clean

Assuming the 90 days trading horizon Bravura Solutions is expected to generate 6.65 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Bravura Solutions is 5.46 times less risky than Carnegie Clean. It trades about 0.07 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Carnegie Clean Energy on October 4, 2024 and sell it today you would lose (6.40) from holding Carnegie Clean Energy or give up 64.0% of portfolio value over 90 days.

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

Bravura Solutions  vs.  Carnegie Clean Energy

Bravura Solutions

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bravura Solutions are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bravura Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carnegie Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bravura Solutions and Carnegie Clean

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

The idea behind Bravura Solutions and Carnegie 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.