Correlation Between Element Solutions and CN Energy

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

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

Diversification Opportunities for Element Solutions and CN Energy

0.0

Correlation Coefficient

Element Solutions  CN Energy

Pay attention - limited upside

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

Pair Corralation between Element Solutions and CN Energy

Considering the 90-day investment horizon Element Solutions is expected to generate 0.26 times more return on investment than CN Energy. However, Element Solutions is 3.87 times less risky than CN Energy. It trades about -0.03 of its potential returns per unit of risk. CN Energy Group is currently generating about -0.17 per unit of risk. If you would invest  2,552  in Element Solutions on December 27, 2024 and sell it today you would lose (81.00) from holding Element Solutions or give up 3.17% of portfolio value over 90 days.

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

Element Solutions  vs.  CN Energy Group

Element Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Element Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Element Solutions is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

CN Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days CN Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Element Solutions and CN Energy

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

The idea behind Element Solutions and CN Energy Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.