Correlation Between General Environmental and Crown Electrokinetics

Can any of the company-specific risk be diversified away by investing in both General Environmental and Crown Electrokinetics 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 General Environmental and Crown Electrokinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between General Environmental Management and Crown Electrokinetics Corp, you can compare the effects of market volatilities on General Environmental and Crown Electrokinetics 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 General Environmental with a short position of Crown Electrokinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Crown Electrokinetics.

Diversification Opportunities for General Environmental and Crown Electrokinetics

-0.29

Correlation Coefficient

General Environmental  Crown Electrokinetics

Very good diversification

The 3 months correlation between General and Crown is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Manageme and Crown Electrokinetics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Electrokinetics and General Environmental 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 General Environmental Management are associated (or correlated) with Crown Electrokinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Electrokinetics has no effect on the direction of General Environmental i.e., General Environmental and Crown Electrokinetics go up and down completely randomly.

Pair Corralation between General Environmental and Crown Electrokinetics

Given the investment horizon of 90 days General Environmental Management is expected to generate 0.73 times more return on investment than Crown Electrokinetics. However, General Environmental Management is 1.36 times less risky than Crown Electrokinetics. It trades about 0.09 of its potential returns per unit of risk. Crown Electrokinetics Corp is currently generating about -0.39 per unit of risk. If you would invest  70.00  in General Environmental Management on November 19, 2024 and sell it today you would earn a total of  20.00  from holding General Environmental Management or generate 28.57% return on investment over 90 days.

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

General Environmental Manageme  vs.  Crown Electrokinetics Corp

General Environmental

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in General Environmental Management are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, General Environmental demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Crown Electrokinetics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crown Electrokinetics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with General Environmental and Crown Electrokinetics

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

The idea behind General Environmental Management and Crown Electrokinetics Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.