Correlation Between Clean Carbon and Novina SA

Can any of the company-specific risk be diversified away by investing in both Clean Carbon and Novina SA 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 Novina SA 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 Novina SA, you can compare the effects of market volatilities on Clean Carbon and Novina SA 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 Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Carbon and Novina SA.

Diversification Opportunities for Clean Carbon and Novina SA

0.19

Correlation Coefficient

Clean Carbon  Novina SA

Average diversification

The 3 months correlation between Clean and Novina is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Clean Carbon Energy and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina SA 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 Novina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novina SA has no effect on the direction of Clean Carbon i.e., Clean Carbon and Novina SA go up and down completely randomly.

Pair Corralation between Clean Carbon and Novina SA

Assuming the 90 days trading horizon Clean Carbon Energy is expected to generate 2.24 times more return on investment than Novina SA. However, Clean Carbon is 2.24 times more volatile than Novina SA. It trades about 0.08 of its potential returns per unit of risk. Novina SA is currently generating about 0.02 per unit of risk. If you would invest  25.00  in Clean Carbon Energy on December 30, 2024 and sell it today you would earn a total of  6.00  from holding Clean Carbon Energy or generate 24.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Clean Carbon Energy  vs.  Novina SA

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.

Novina SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novina SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Novina SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Clean Carbon and Novina SA

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

The idea behind Clean Carbon Energy and Novina SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..