Correlation Between Charah Solutions and Susglobal Energy

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

By analyzing existing cross correlation between Charah Solutions and Susglobal Energy Corp, you can compare the effects of market volatilities on Charah Solutions and Susglobal Energy 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 Charah Solutions with a short position of Susglobal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charah Solutions and Susglobal Energy.

Diversification Opportunities for Charah Solutions and Susglobal Energy

-0.7

Correlation Coefficient

Charah Solutions  Susglobal Energy

Excellent diversification

The 3 months correlation between Charah and Susglobal is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charah Solutions and Susglobal Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Susglobal Energy Corp and Charah Solutions 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 Charah Solutions are associated (or correlated) with Susglobal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Susglobal Energy Corp has no effect on the direction of Charah Solutions i.e., Charah Solutions and Susglobal Energy go up and down completely randomly.

Pair Corralation between Charah Solutions and Susglobal Energy

Given the investment horizon of 90 days Charah Solutions is expected to generate 1.02 times less return on investment than Susglobal Energy. But when comparing it to its historical volatility, Charah Solutions is 1.21 times less risky than Susglobal Energy. It trades about 0.04 of its potential returns per unit of risk. Susglobal Energy Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Susglobal Energy Corp on September 3, 2024 and sell it today you would lose (12.60) from holding Susglobal Energy Corp or give up 84.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	22.42%
Values	Daily Returns

Charah Solutions  vs.  Susglobal Energy Corp

Charah Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charah Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Charah Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Susglobal Energy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Susglobal Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Susglobal Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charah Solutions and Susglobal Energy

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

The idea behind Charah Solutions and Susglobal Energy Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.