Correlation Between Carnegie Clean and Brickworks

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

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

Diversification Opportunities for Carnegie Clean and Brickworks

0.02

Correlation Coefficient

Carnegie Clean  Brickworks

Significant diversification

The 3 months correlation between Carnegie and Brickworks is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Brickworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickworks and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Brickworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickworks has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Brickworks go up and down completely randomly.

Pair Corralation between Carnegie Clean and Brickworks

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to generate 19.3 times more return on investment than Brickworks. However, Carnegie Clean is 19.3 times more volatile than Brickworks. It trades about 0.09 of its potential returns per unit of risk. Brickworks is currently generating about 0.03 per unit of risk. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Carnegie Clean Energy  vs.  Brickworks

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.

Brickworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Carnegie Clean and Brickworks

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

The idea behind Carnegie Clean Energy and Brickworks 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.