Correlation Between CPR Gomu and ABSOLUTE CLEAN

Can any of the company-specific risk be diversified away by investing in both CPR Gomu and ABSOLUTE CLEAN 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 CPR Gomu and ABSOLUTE CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPR Gomu Industrial and ABSOLUTE CLEAN ENERGY, you can compare the effects of market volatilities on CPR Gomu and ABSOLUTE CLEAN 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 CPR Gomu with a short position of ABSOLUTE CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPR Gomu and ABSOLUTE CLEAN.

Diversification Opportunities for CPR Gomu and ABSOLUTE CLEAN

0.71

Correlation Coefficient

CPR Gomu  ABSOLUTE CLEAN

Poor diversification

The 3 months correlation between CPR and ABSOLUTE is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and ABSOLUTE CLEAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSOLUTE CLEAN ENERGY and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with ABSOLUTE CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSOLUTE CLEAN ENERGY has no effect on the direction of CPR Gomu i.e., CPR Gomu and ABSOLUTE CLEAN go up and down completely randomly.

Pair Corralation between CPR Gomu and ABSOLUTE CLEAN

Assuming the 90 days trading horizon CPR Gomu Industrial is expected to under-perform the ABSOLUTE CLEAN. In addition to that, CPR Gomu is 2.41 times more volatile than ABSOLUTE CLEAN ENERGY. It trades about -0.25 of its total potential returns per unit of risk. ABSOLUTE CLEAN ENERGY is currently generating about -0.05 per unit of volatility. If you would invest  130.00  in ABSOLUTE CLEAN ENERGY on November 29, 2024 and sell it today you would lose (3.00) from holding ABSOLUTE CLEAN ENERGY or give up 2.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

CPR Gomu Industrial  vs.  ABSOLUTE CLEAN ENERGY

CPR Gomu Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPR Gomu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ABSOLUTE CLEAN ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABSOLUTE CLEAN ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ABSOLUTE CLEAN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CPR Gomu and ABSOLUTE CLEAN

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

The idea behind CPR Gomu Industrial and ABSOLUTE CLEAN ENERGY 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.