Correlation Between Capital Clean and Aluminumof China

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

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

Diversification Opportunities for Capital Clean and Aluminumof China

0.65

Correlation Coefficient

Capital Clean  Aluminumof China

Poor diversification

The 3 months correlation between Capital and Aluminumof is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and Capital 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 Capital Clean Energy are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Capital Clean i.e., Capital Clean and Aluminumof China go up and down completely randomly.

Pair Corralation between Capital Clean and Aluminumof China

Given the investment horizon of 90 days Capital Clean Energy is expected to generate 0.33 times more return on investment than Aluminumof China. However, Capital Clean Energy is 3.01 times less risky than Aluminumof China. It trades about -0.02 of its potential returns per unit of risk. Aluminum of is currently generating about -0.03 per unit of risk. If you would invest  1,862  in Capital Clean Energy on October 26, 2024 and sell it today you would lose (48.00) from holding Capital Clean Energy or give up 2.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.61%
Values	Daily Returns

Capital Clean Energy  vs.  Aluminum of

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aluminumof China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Capital Clean and Aluminumof China

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

The idea behind Capital Clean Energy and Aluminum of 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.