Correlation Between CEZ As and Clean Carbon

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

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

Diversification Opportunities for CEZ As and Clean Carbon

-0.6

Correlation Coefficient

CEZ As  Clean Carbon

Excellent diversification

The 3 months correlation between CEZ and Clean is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Clean Carbon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Carbon Energy and CEZ As 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 CEZ as are associated (or correlated) with Clean Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Carbon Energy has no effect on the direction of CEZ As i.e., CEZ As and Clean Carbon go up and down completely randomly.

Pair Corralation between CEZ As and Clean Carbon

Assuming the 90 days trading horizon CEZ as is expected to generate 0.35 times more return on investment than Clean Carbon. However, CEZ as is 2.85 times less risky than Clean Carbon. It trades about 0.03 of its potential returns per unit of risk. Clean Carbon Energy is currently generating about 0.0 per unit of risk. If you would invest  13,333  in CEZ as on October 13, 2024 and sell it today you would earn a total of  2,567  from holding CEZ as or generate 19.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

CEZ as  vs.  Clean Carbon Energy

CEZ as

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Clean Carbon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Carbon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with CEZ As and Clean Carbon

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

The idea behind CEZ as and Clean Carbon Energy 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.