Correlation Between ClearSign Combustion and Atmofizer Technologies

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

By analyzing existing cross correlation between ClearSign Combustion and Atmofizer Technologies, you can compare the effects of market volatilities on ClearSign Combustion and Atmofizer Technologies 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 ClearSign Combustion with a short position of Atmofizer Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearSign Combustion and Atmofizer Technologies.

Diversification Opportunities for ClearSign Combustion and Atmofizer Technologies

-0.51

Correlation Coefficient

ClearSign Combustion  Atmofizer Technologies

Excellent diversification

The 3 months correlation between ClearSign and Atmofizer is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Atmofizer Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmofizer Technologies and ClearSign Combustion 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 ClearSign Combustion are associated (or correlated) with Atmofizer Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmofizer Technologies has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Atmofizer Technologies go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Atmofizer Technologies

Given the investment horizon of 90 days ClearSign Combustion is expected to generate 11.77 times less return on investment than Atmofizer Technologies. But when comparing it to its historical volatility, ClearSign Combustion is 7.74 times less risky than Atmofizer Technologies. It trades about 0.05 of its potential returns per unit of risk. Atmofizer Technologies is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.25  in Atmofizer Technologies on October 3, 2024 and sell it today you would earn a total of  1.95  from holding Atmofizer Technologies or generate 45.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ClearSign Combustion  vs.  Atmofizer Technologies

ClearSign Combustion

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Atmofizer Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atmofizer Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Atmofizer Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearSign Combustion and Atmofizer Technologies

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

The idea behind ClearSign Combustion and Atmofizer Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.