Correlation Between Global Clean and SLC Agricola

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

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

Diversification Opportunities for Global Clean and SLC Agricola

-0.65

Correlation Coefficient

Global Clean  SLC Agricola

Excellent diversification

The 3 months correlation between Global and SLC is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy and SLC Agricola SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLC Agricola SA and Global Clean 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 Global Clean Energy are associated (or correlated) with SLC Agricola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLC Agricola SA has no effect on the direction of Global Clean i.e., Global Clean and SLC Agricola go up and down completely randomly.

Pair Corralation between Global Clean and SLC Agricola

Given the investment horizon of 90 days Global Clean Energy is expected to generate 5.63 times more return on investment than SLC Agricola. However, Global Clean is 5.63 times more volatile than SLC Agricola SA. It trades about 0.23 of its potential returns per unit of risk. SLC Agricola SA is currently generating about -0.04 per unit of risk. If you would invest  27.00  in Global Clean Energy on September 4, 2024 and sell it today you would earn a total of  72.00  from holding Global Clean Energy or generate 266.67% return on investment over 90 days.

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

Global Clean Energy  vs.  SLC Agricola SA

Global Clean Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Clean Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, Global Clean demonstrated solid returns over the last few months and may actually be approaching a breakup point.

SLC Agricola SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SLC Agricola SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, SLC Agricola is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Clean and SLC Agricola

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

The idea behind Global Clean Energy and SLC Agricola SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.