Correlation Between ESGL Holdings and Clean Harbors

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

By analyzing existing cross correlation between ESGL Holdings Limited and Clean Harbors, you can compare the effects of market volatilities on ESGL Holdings and Clean Harbors 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 ESGL Holdings with a short position of Clean Harbors. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESGL Holdings and Clean Harbors.

Diversification Opportunities for ESGL Holdings and Clean Harbors

0.09

Correlation Coefficient

ESGL Holdings  Clean Harbors

Significant diversification

The 3 months correlation between ESGL and Clean is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding ESGL Holdings Limited and Clean Harbors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Harbors and ESGL Holdings 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 ESGL Holdings Limited are associated (or correlated) with Clean Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Harbors has no effect on the direction of ESGL Holdings i.e., ESGL Holdings and Clean Harbors go up and down completely randomly.

Pair Corralation between ESGL Holdings and Clean Harbors

Assuming the 90 days horizon ESGL Holdings Limited is expected to generate 7.0 times more return on investment than Clean Harbors. However, ESGL Holdings is 7.0 times more volatile than Clean Harbors. It trades about 0.13 of its potential returns per unit of risk. Clean Harbors is currently generating about 0.02 per unit of risk. If you would invest  1.18  in ESGL Holdings Limited on September 12, 2024 and sell it today you would earn a total of  0.62  from holding ESGL Holdings Limited or generate 52.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	74.6%
Values	Daily Returns

ESGL Holdings Limited  vs.  Clean Harbors

ESGL Holdings Limited

Risk-Adjusted Performance

10 of 100

OK

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

Clean Harbors

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Harbors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Clean Harbors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ESGL Holdings and Clean Harbors

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

The idea behind ESGL Holdings Limited and Clean Harbors 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.