Correlation Between Easy Software and Carnegie Clean

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

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

Diversification Opportunities for Easy Software and Carnegie Clean

-0.26

Correlation Coefficient

Easy Software  Carnegie Clean

Very good diversification

The 3 months correlation between Easy and Carnegie is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Easy Software 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 Easy Software AG are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Easy Software i.e., Easy Software and Carnegie Clean go up and down completely randomly.

Pair Corralation between Easy Software and Carnegie Clean

Assuming the 90 days trading horizon Easy Software is expected to generate 1.29 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, Easy Software AG is 2.91 times less risky than Carnegie Clean. It trades about 0.03 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Carnegie Clean Energy on October 11, 2024 and sell it today you would lose (2.88) from holding Carnegie Clean Energy or give up 57.6% of portfolio value over 90 days.

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

Easy Software AG  vs.  Carnegie Clean Energy

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Easy Software AG are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Easy Software displayed solid returns over the last few months and may actually be approaching a breakup point.

Carnegie Clean Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Easy Software and Carnegie Clean

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

The idea behind Easy Software AG and Carnegie Clean Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.