Correlation Between Global Clean and V

Can any of the company-specific risk be diversified away by investing in both Global Clean and V 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 V 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 V Group, you can compare the effects of market volatilities on Global Clean and V 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 V. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Clean and V.

Diversification Opportunities for Global Clean and V

0.0

Correlation Coefficient

Global Clean  V

Pay attention - limited upside

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

Pair Corralation between Global Clean and V

Given the investment horizon of 90 days Global Clean is expected to generate 11.36 times less return on investment than V. But when comparing it to its historical volatility, Global Clean Energy is 3.66 times less risky than V. It trades about 0.03 of its potential returns per unit of risk. V Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.03  in V Group on September 13, 2024 and sell it today you would lose (0.03) from holding V Group or give up 100.0% of portfolio value over 90 days.

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

Global Clean Energy  vs.  V Group

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 unsteady technical and fundamental indicators, Global Clean demonstrated solid returns over the last few months and may actually be approaching a breakup point.

V Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days V Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Global Clean and V

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

The idea behind Global Clean Energy and V 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.