Correlation Between ClearSign Combustion and Dr Foods

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

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

Diversification Opportunities for ClearSign Combustion and Dr Foods

0.71

Correlation Coefficient

ClearSign Combustion  Dr Foods

Poor diversification

The 3 months correlation between ClearSign and DRFS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Dr Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dr Foods 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 Dr Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dr Foods has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Dr Foods go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Dr Foods

Given the investment horizon of 90 days ClearSign Combustion is expected to under-perform the Dr Foods. But the stock apears to be less risky and, when comparing its historical volatility, ClearSign Combustion is 4.2 times less risky than Dr Foods. The stock trades about -0.16 of its potential returns per unit of risk. The Dr Foods is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  2.40  in Dr Foods on December 29, 2024 and sell it today you would earn a total of  1.59  from holding Dr Foods or generate 66.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	11.48%
Values	Daily Returns

ClearSign Combustion  vs.  Dr Foods

ClearSign Combustion

Risk-Adjusted Performance

Very Weak

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

Dr Foods

Risk-Adjusted Performance

Very Strong

Over the last 90 days Dr Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively abnormal technical and fundamental indicators, Dr Foods unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearSign Combustion and Dr Foods

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

The idea behind ClearSign Combustion and Dr Foods 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.