Correlation Between Capital Clean and MetaVia

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

Diversification Opportunities for Capital Clean and MetaVia

0.5

Correlation Coefficient

Capital Clean  MetaVia

Very weak diversification

The 3 months correlation between Capital and MetaVia is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and MetaVia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaVia 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 MetaVia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaVia has no effect on the direction of Capital Clean i.e., Capital Clean and MetaVia go up and down completely randomly.

Pair Corralation between Capital Clean and MetaVia

Given the investment horizon of 90 days Capital Clean Energy is expected to generate 0.31 times more return on investment than MetaVia. However, Capital Clean Energy is 3.22 times less risky than MetaVia. It trades about 0.02 of its potential returns per unit of risk. MetaVia is currently generating about -0.01 per unit of risk. If you would invest  1,725  in Capital Clean Energy on October 24, 2024 and sell it today you would earn a total of  81.00  from holding Capital Clean Energy or generate 4.7% return on investment over 90 days.

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

Capital Clean Energy  vs.  MetaVia

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

MetaVia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaVia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Capital Clean and MetaVia

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

The idea behind Capital Clean Energy and MetaVia 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.