Correlation Between ClearSign Combustion and One World

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

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

Diversification Opportunities for ClearSign Combustion and One World

-0.13

Correlation Coefficient

ClearSign Combustion  One World

Good diversification

The 3 months correlation between ClearSign and One is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and One World Universe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One World Universe 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 One World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One World Universe has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and One World go up and down completely randomly.

Pair Corralation between ClearSign Combustion and One World

Given the investment horizon of 90 days ClearSign Combustion is expected to under-perform the One World. But the stock apears to be less risky and, when comparing its historical volatility, ClearSign Combustion is 1.71 times less risky than One World. The stock trades about -0.08 of its potential returns per unit of risk. The One World Universe is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.81  in One World Universe on December 1, 2024 and sell it today you would lose (0.06) from holding One World Universe or give up 7.41% of portfolio value over 90 days.

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

ClearSign Combustion  vs.  One World Universe

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.

One World Universe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in One World Universe are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, One World showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearSign Combustion and One World

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

The idea behind ClearSign Combustion and One World Universe 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.