Correlation Between Delta CleanTech and Advanced Emissions

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

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

Diversification Opportunities for Delta CleanTech and Advanced Emissions

0.0

Correlation Coefficient

Delta CleanTech  Advanced Emissions

Pay attention - limited upside

The 3 months correlation between Delta and Advanced is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Delta CleanTech and Advanced Emissions Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Emissions and Delta CleanTech 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 Delta CleanTech are associated (or correlated) with Advanced Emissions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Emissions has no effect on the direction of Delta CleanTech i.e., Delta CleanTech and Advanced Emissions go up and down completely randomly.

Pair Corralation between Delta CleanTech and Advanced Emissions

If you would invest  2.25  in Delta CleanTech on December 29, 2024 and sell it today you would earn a total of  1.11  from holding Delta CleanTech or generate 49.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Delta CleanTech  vs.  Advanced Emissions Solutions

Delta CleanTech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delta CleanTech are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Delta CleanTech reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Emissions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Emissions Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Advanced Emissions is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Delta CleanTech and Advanced Emissions

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

The idea behind Delta CleanTech and Advanced Emissions Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.