Correlation Between Casella Waste and OriginClear

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

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

Diversification Opportunities for Casella Waste and OriginClear

-0.78

Correlation Coefficient

Casella Waste  OriginClear

Pay attention - limited upside

The 3 months correlation between Casella and OriginClear is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Casella Waste Systems and OriginClear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OriginClear and Casella Waste 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 Casella Waste Systems are associated (or correlated) with OriginClear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OriginClear has no effect on the direction of Casella Waste i.e., Casella Waste and OriginClear go up and down completely randomly.

Pair Corralation between Casella Waste and OriginClear

Given the investment horizon of 90 days Casella Waste Systems is expected to generate 0.16 times more return on investment than OriginClear. However, Casella Waste Systems is 6.26 times less risky than OriginClear. It trades about -0.01 of its potential returns per unit of risk. OriginClear is currently generating about -0.01 per unit of risk. If you would invest  10,840  in Casella Waste Systems on September 15, 2024 and sell it today you would lose (234.00) from holding Casella Waste Systems or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Casella Waste Systems  vs.  OriginClear

Casella Waste Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

OriginClear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OriginClear has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, OriginClear is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Casella Waste and OriginClear

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

The idea behind Casella Waste Systems and OriginClear 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.