Correlation Between CVR Energy and Aemetis

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

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

Diversification Opportunities for CVR Energy and Aemetis

-0.03

Correlation Coefficient

CVR Energy  Aemetis

Good diversification

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

Pair Corralation between CVR Energy and Aemetis

Considering the 90-day investment horizon CVR Energy is expected to generate 0.57 times more return on investment than Aemetis. However, CVR Energy is 1.77 times less risky than Aemetis. It trades about 0.06 of its potential returns per unit of risk. Aemetis is currently generating about -0.1 per unit of risk. If you would invest  1,847  in CVR Energy on December 27, 2024 and sell it today you would earn a total of  156.00  from holding CVR Energy or generate 8.45% return on investment over 90 days.

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

CVR Energy  vs.  Aemetis

CVR Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, CVR Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aemetis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aemetis 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 basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with CVR Energy and Aemetis

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

The idea behind CVR Energy and Aemetis 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.