Correlation Between Delta CleanTech and Aker Carbon

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

By analyzing existing cross correlation between Delta CleanTech and Aker Carbon Capture, you can compare the effects of market volatilities on Delta CleanTech and Aker Carbon 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 Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta CleanTech and Aker Carbon.

Diversification Opportunities for Delta CleanTech and Aker Carbon

-0.44

Correlation Coefficient

Delta CleanTech  Aker Carbon

Very good diversification

The 3 months correlation between Delta and Aker is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Delta CleanTech and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture 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 Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Delta CleanTech i.e., Delta CleanTech and Aker Carbon go up and down completely randomly.

Pair Corralation between Delta CleanTech and Aker Carbon

Assuming the 90 days horizon Delta CleanTech is expected to generate 4.94 times more return on investment than Aker Carbon. However, Delta CleanTech is 4.94 times more volatile than Aker Carbon Capture. It trades about 0.15 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.02 per unit of risk. If you would invest  2.25  in Delta CleanTech on December 28, 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	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Delta CleanTech  vs.  Aker Carbon Capture

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.

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Delta CleanTech and Aker Carbon

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

The idea behind Delta CleanTech and Aker Carbon Capture 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.