Correlation Between China Clean and INGERSOLL

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

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

Diversification Opportunities for China Clean and INGERSOLL

0.0

Correlation Coefficient

China Clean  INGERSOLL

Pay attention - limited upside

The 3 months correlation between China and INGERSOLL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Clean Energy and INGERSOLL RAND GLOBAL HLDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INGERSOLL RAND GLOBAL and China 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 China Clean Energy are associated (or correlated) with INGERSOLL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INGERSOLL RAND GLOBAL has no effect on the direction of China Clean i.e., China Clean and INGERSOLL go up and down completely randomly.

Pair Corralation between China Clean and INGERSOLL

If you would invest  0.01  in China Clean Energy on October 4, 2024 and sell it today you would earn a total of  0.00  from holding China Clean Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	54.55%
Values	Daily Returns

China Clean Energy  vs.  INGERSOLL RAND GLOBAL HLDG

China Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, China Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for INGERSOLL RAND GLOBAL HLDG investors.

Pair Trading with China Clean and INGERSOLL

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

The idea behind China Clean Energy and INGERSOLL RAND GLOBAL HLDG 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.