Correlation Between Carnegie Clean and Odyssey Energy

Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and Odyssey 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 Carnegie Clean and Odyssey Energy 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 Odyssey Energy, you can compare the effects of market volatilities on Carnegie Clean and Odyssey 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 Carnegie Clean with a short position of Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Odyssey Energy.

Diversification Opportunities for Carnegie Clean and Odyssey Energy

0.25

Correlation Coefficient

Carnegie Clean  Odyssey Energy

Modest diversification

The 3 months correlation between Carnegie and Odyssey is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy 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 Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Odyssey Energy go up and down completely randomly.

Pair Corralation between Carnegie Clean and Odyssey Energy

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Odyssey Energy. In addition to that, Carnegie Clean is 1.36 times more volatile than Odyssey Energy. It trades about -0.3 of its total potential returns per unit of risk. Odyssey Energy is currently generating about -0.12 per unit of volatility. If you would invest  1.90  in Odyssey Energy on October 8, 2024 and sell it today you would lose (0.10) from holding Odyssey Energy or give up 5.26% of portfolio value over 90 days.

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

Carnegie Clean Energy  vs.  Odyssey Energy

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Odyssey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Carnegie Clean and Odyssey Energy

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

The idea behind Carnegie Clean Energy and Odyssey 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.