Correlation Between Clean Power and International Biotechnology

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

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

Diversification Opportunities for Clean Power and International Biotechnology

-0.03

Correlation Coefficient

Clean Power  International Biotechnology

Good diversification

The 3 months correlation between Clean and International is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Clean Power Hydrogen and International Biotechnology Tr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Biotechnology and Clean Power 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 Clean Power Hydrogen are associated (or correlated) with International Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Biotechnology has no effect on the direction of Clean Power i.e., Clean Power and International Biotechnology go up and down completely randomly.

Pair Corralation between Clean Power and International Biotechnology

Assuming the 90 days trading horizon Clean Power Hydrogen is expected to under-perform the International Biotechnology. In addition to that, Clean Power is 3.61 times more volatile than International Biotechnology Trust. It trades about -0.01 of its total potential returns per unit of risk. International Biotechnology Trust is currently generating about 0.09 per unit of volatility. If you would invest  66,310  in International Biotechnology Trust on October 25, 2024 and sell it today you would earn a total of  4,490  from holding International Biotechnology Trust or generate 6.77% return on investment over 90 days.

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

Clean Power Hydrogen  vs.  International Biotechnology Tr

Clean Power Hydrogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Power Hydrogen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Clean Power is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

International Biotechnology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Biotechnology Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, International Biotechnology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Clean Power and International Biotechnology

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

The idea behind Clean Power Hydrogen and International Biotechnology Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.