Correlation Between China Conch and Aker Carbon

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

By analyzing existing cross correlation between China Conch Venture and Aker Carbon Capture, you can compare the effects of market volatilities on China Conch and Aker Carbon 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 Conch with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Conch and Aker Carbon.

Diversification Opportunities for China Conch and Aker Carbon

-0.15

Correlation Coefficient

China Conch  Aker Carbon

Good diversification

The 3 months correlation between China and Aker is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding China Conch Venture and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and China Conch 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 Conch Venture are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of China Conch i.e., China Conch and Aker Carbon go up and down completely randomly.

Pair Corralation between China Conch and Aker Carbon

Assuming the 90 days horizon China Conch Venture is expected to generate 0.02 times more return on investment than Aker Carbon. However, China Conch Venture is 61.65 times less risky than Aker Carbon. It trades about 0.13 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.02 per unit of risk. If you would invest  93.00  in China Conch Venture on December 28, 2024 and sell it today you would earn a total of  1.00  from holding China Conch Venture or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

China Conch Venture  vs.  Aker Carbon Capture

China Conch Venture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Conch Venture are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China Conch is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental 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 China Conch and Aker Carbon

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

The idea behind China Conch Venture and Aker Carbon Capture 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.