Correlation Between Capital Clean and Ontex Group

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

Diversification Opportunities for Capital Clean and Ontex Group

-0.55

Correlation Coefficient

Capital Clean  Ontex Group

Excellent diversification

The 3 months correlation between Capital and Ontex is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Ontex Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ontex Group NV 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 Ontex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ontex Group NV has no effect on the direction of Capital Clean i.e., Capital Clean and Ontex Group go up and down completely randomly.

Pair Corralation between Capital Clean and Ontex Group

Given the investment horizon of 90 days Capital Clean Energy is expected to generate 1.58 times more return on investment than Ontex Group. However, Capital Clean is 1.58 times more volatile than Ontex Group NV. It trades about 0.08 of its potential returns per unit of risk. Ontex Group NV is currently generating about -0.13 per unit of risk. If you would invest  1,835  in Capital Clean Energy on December 20, 2024 and sell it today you would earn a total of  132.00  from holding Capital Clean Energy or generate 7.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Capital Clean Energy  vs.  Ontex Group NV

Capital Clean Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Clean Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Capital Clean may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ontex Group NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ontex Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic 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 Ontex Group

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

The idea behind Capital Clean Energy and Ontex Group NV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.