Correlation Between Coromandel International and Clean Science

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

By analyzing existing cross correlation between Coromandel International Limited and Clean Science and, you can compare the effects of market volatilities on Coromandel International and Clean Science 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 Coromandel International with a short position of Clean Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coromandel International and Clean Science.

Diversification Opportunities for Coromandel International and Clean Science

0.34

Correlation Coefficient

Coromandel International  Clean Science

Weak diversification

The 3 months correlation between Coromandel and Clean is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Coromandel International Limit and Clean Science and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science and Coromandel International 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 Coromandel International Limited are associated (or correlated) with Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science has no effect on the direction of Coromandel International i.e., Coromandel International and Clean Science go up and down completely randomly.

Pair Corralation between Coromandel International and Clean Science

Assuming the 90 days trading horizon Coromandel International Limited is expected to generate 0.96 times more return on investment than Clean Science. However, Coromandel International Limited is 1.04 times less risky than Clean Science. It trades about 0.06 of its potential returns per unit of risk. Clean Science and is currently generating about -0.1 per unit of risk. If you would invest  184,025  in Coromandel International Limited on December 27, 2024 and sell it today you would earn a total of  13,930  from holding Coromandel International Limited or generate 7.57% return on investment over 90 days.

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

Coromandel International Limit  vs.  Clean Science and

Coromandel International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coromandel International Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Coromandel International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Clean Science

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Coromandel International and Clean Science

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

The idea behind Coromandel International Limited and Clean Science and 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..