Correlation Between CMG Cleantech and Entech SE

Can any of the company-specific risk be diversified away by investing in both CMG Cleantech and Entech SE 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 CMG Cleantech and Entech SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CMG Cleantech SA and Entech SE SAS, you can compare the effects of market volatilities on CMG Cleantech and Entech SE 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 CMG Cleantech with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMG Cleantech and Entech SE.

Diversification Opportunities for CMG Cleantech and Entech SE

0.12

Correlation Coefficient

CMG Cleantech  Entech SE

Average diversification

The 3 months correlation between CMG and Entech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CMG Cleantech SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and CMG Cleantech 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 CMG Cleantech SA are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of CMG Cleantech i.e., CMG Cleantech and Entech SE go up and down completely randomly.

Pair Corralation between CMG Cleantech and Entech SE

Assuming the 90 days trading horizon CMG Cleantech SA is expected to under-perform the Entech SE. But the stock apears to be less risky and, when comparing its historical volatility, CMG Cleantech SA is 1.99 times less risky than Entech SE. The stock trades about -0.01 of its potential returns per unit of risk. The Entech SE SAS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  506.00  in Entech SE SAS on October 7, 2024 and sell it today you would earn a total of  94.00  from holding Entech SE SAS or generate 18.58% return on investment over 90 days.

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

CMG Cleantech SA  vs.  Entech SE SAS

CMG Cleantech SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CMG Cleantech SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CMG Cleantech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Entech SE SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entech SE SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Entech SE is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CMG Cleantech and Entech SE

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

The idea behind CMG Cleantech SA and Entech SE SAS 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.