Correlation Between ClearSign Combustion and 374Water Common

Can any of the company-specific risk be diversified away by investing in both ClearSign Combustion and 374Water Common 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 374Water Common into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ClearSign Combustion and 374Water Common Stock, you can compare the effects of market volatilities on ClearSign Combustion and 374Water Common 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 374Water Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearSign Combustion and 374Water Common.

Diversification Opportunities for ClearSign Combustion and 374Water Common

-0.75

Correlation Coefficient

ClearSign Combustion  374Water Common

Pay attention - limited upside

The 3 months correlation between ClearSign and 374Water is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and 374Water Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 374Water Common Stock 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 374Water Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 374Water Common Stock has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and 374Water Common go up and down completely randomly.

Pair Corralation between ClearSign Combustion and 374Water Common

Given the investment horizon of 90 days ClearSign Combustion is expected to generate 0.92 times more return on investment than 374Water Common. However, ClearSign Combustion is 1.09 times less risky than 374Water Common. It trades about 0.15 of its potential returns per unit of risk. 374Water Common Stock is currently generating about -0.11 per unit of risk. If you would invest  78.00  in ClearSign Combustion on September 12, 2024 and sell it today you would earn a total of  38.00  from holding ClearSign Combustion or generate 48.72% return on investment over 90 days.

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

ClearSign Combustion  vs.  374Water Common Stock

ClearSign Combustion

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

374Water Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 374Water Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ClearSign Combustion and 374Water Common

The main advantage of trading using opposite ClearSign Combustion and 374Water Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearSign Combustion position performs unexpectedly, 374Water Common 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 374Water Common will offset losses from the drop in 374Water Common's long position.

The idea behind ClearSign Combustion and 374Water Common Stock 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.