Correlation Between Clean Carbon and Agroton Public

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

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

Diversification Opportunities for Clean Carbon and Agroton Public

0.44

Correlation Coefficient

Clean Carbon  Agroton Public

Very weak diversification

The 3 months correlation between Clean and Agroton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Clean Carbon Energy and Agroton Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agroton Public and Clean Carbon 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 Clean Carbon Energy are associated (or correlated) with Agroton Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agroton Public has no effect on the direction of Clean Carbon i.e., Clean Carbon and Agroton Public go up and down completely randomly.

Pair Corralation between Clean Carbon and Agroton Public

Assuming the 90 days trading horizon Clean Carbon is expected to generate 1.56 times less return on investment than Agroton Public. In addition to that, Clean Carbon is 1.0 times more volatile than Agroton Public. It trades about 0.08 of its total potential returns per unit of risk. Agroton Public is currently generating about 0.13 per unit of volatility. If you would invest  377.00  in Agroton Public on December 30, 2024 and sell it today you would earn a total of  207.00  from holding Agroton Public or generate 54.91% return on investment over 90 days.

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

Clean Carbon Energy  vs.  Agroton Public

Clean Carbon Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Carbon Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Clean Carbon reported solid returns over the last few months and may actually be approaching a breakup point.

Agroton Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agroton Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agroton Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Carbon and Agroton Public

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

The idea behind Clean Carbon Energy and Agroton Public 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..