Correlation Between Cleanaway Waste and Indiana Resources

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

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

Diversification Opportunities for Cleanaway Waste and Indiana Resources

-0.66

Correlation Coefficient

Cleanaway Waste  Indiana Resources

Excellent diversification

The 3 months correlation between Cleanaway and Indiana is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources and Cleanaway 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 Cleanaway Waste Management are associated (or correlated) with Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and Indiana Resources go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Indiana Resources

Assuming the 90 days trading horizon Cleanaway Waste Management is expected to under-perform the Indiana Resources. But the stock apears to be less risky and, when comparing its historical volatility, Cleanaway Waste Management is 1.52 times less risky than Indiana Resources. The stock trades about -0.32 of its potential returns per unit of risk. The Indiana Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.20  in Indiana Resources on October 10, 2024 and sell it today you would earn a total of  0.10  from holding Indiana Resources or generate 1.61% return on investment over 90 days.

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

Cleanaway Waste Management  vs.  Indiana Resources

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Indiana Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Indiana Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Indiana Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cleanaway Waste and Indiana Resources

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

The idea behind Cleanaway Waste Management and Indiana Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.