Correlation Between Carnegie Clean and Global Fashion

Can any of the company-specific risk be diversified away by investing in both Carnegie Clean and Global Fashion 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 Carnegie Clean and Global Fashion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carnegie Clean Energy and Global Fashion Group, you can compare the effects of market volatilities on Carnegie Clean and Global Fashion 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 Carnegie Clean with a short position of Global Fashion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carnegie Clean and Global Fashion.

Diversification Opportunities for Carnegie Clean and Global Fashion

-0.05

Correlation Coefficient

Carnegie Clean  Global Fashion

Good diversification

The 3 months correlation between Carnegie and Global is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Global Fashion Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Fashion Group and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Global Fashion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Fashion Group has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Global Fashion go up and down completely randomly.

Pair Corralation between Carnegie Clean and Global Fashion

Assuming the 90 days trading horizon Carnegie Clean Energy is expected to under-perform the Global Fashion. But the stock apears to be less risky and, when comparing its historical volatility, Carnegie Clean Energy is 1.63 times less risky than Global Fashion. The stock trades about -0.19 of its potential returns per unit of risk. The Global Fashion Group is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Global Fashion Group on October 4, 2024 and sell it today you would lose (2.00) from holding Global Fashion Group or give up 8.33% of portfolio value over 90 days.

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

Carnegie Clean Energy  vs.  Global Fashion Group

Carnegie Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Fashion Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Fashion Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Global Fashion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnegie Clean and Global Fashion

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

The idea behind Carnegie Clean Energy and Global Fashion Group 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.

Check out your portfolio center.

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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.