Correlation Between Energy Recovery and CleanCore Solutions

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

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

Diversification Opportunities for Energy Recovery and CleanCore Solutions

0.13

Correlation Coefficient

Energy Recovery  CleanCore Solutions

Average diversification

The 3 months correlation between Energy and CleanCore is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Energy Recovery and CleanCore Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanCore Solutions and Energy Recovery 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 Energy Recovery are associated (or correlated) with CleanCore Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanCore Solutions has no effect on the direction of Energy Recovery i.e., Energy Recovery and CleanCore Solutions go up and down completely randomly.

Pair Corralation between Energy Recovery and CleanCore Solutions

Given the investment horizon of 90 days Energy Recovery is expected to generate 4.76 times less return on investment than CleanCore Solutions. But when comparing it to its historical volatility, Energy Recovery is 2.37 times less risky than CleanCore Solutions. It trades about 0.03 of its potential returns per unit of risk. CleanCore Solutions is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  157.00  in CleanCore Solutions on September 13, 2024 and sell it today you would earn a total of  18.00  from holding CleanCore Solutions or generate 11.46% return on investment over 90 days.

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

Energy Recovery  vs.  CleanCore Solutions

Energy Recovery

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Recovery are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Energy Recovery may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CleanCore Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CleanCore Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, CleanCore Solutions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Recovery and CleanCore Solutions

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

The idea behind Energy Recovery and CleanCore 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..