Correlation Between Carbon Revolution and Cirmaker Technology

Can any of the company-specific risk be diversified away by investing in both Carbon Revolution and Cirmaker Technology 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 Carbon Revolution and Cirmaker Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carbon Revolution Public and Cirmaker Technology, you can compare the effects of market volatilities on Carbon Revolution and Cirmaker Technology 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 Carbon Revolution with a short position of Cirmaker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carbon Revolution and Cirmaker Technology.

Diversification Opportunities for Carbon Revolution and Cirmaker Technology

0.47

Correlation Coefficient

Carbon Revolution  Cirmaker Technology

Very weak diversification

The 3 months correlation between Carbon and Cirmaker is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Revolution Public and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Carbon Revolution 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 Carbon Revolution Public are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Carbon Revolution i.e., Carbon Revolution and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Carbon Revolution and Cirmaker Technology

Assuming the 90 days horizon Carbon Revolution Public is expected to under-perform the Cirmaker Technology. In addition to that, Carbon Revolution is 1.12 times more volatile than Cirmaker Technology. It trades about -0.01 of its total potential returns per unit of risk. Cirmaker Technology is currently generating about 0.06 per unit of volatility. If you would invest  5.70  in Cirmaker Technology on December 11, 2024 and sell it today you would lose (0.10) from holding Cirmaker Technology or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Carbon Revolution Public  vs.  Cirmaker Technology

Carbon Revolution Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Cirmaker Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carbon Revolution and Cirmaker Technology

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

The idea behind Carbon Revolution Public and Cirmaker Technology 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.