Correlation Between Ontex Group and Capital Clean

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

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

Diversification Opportunities for Ontex Group and Capital Clean

0.53

Correlation Coefficient

Ontex Group  Capital Clean

Very weak diversification

The 3 months correlation between Ontex and Capital is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Ontex Group NV and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Ontex Group 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 Ontex Group NV are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Ontex Group i.e., Ontex Group and Capital Clean go up and down completely randomly.

Pair Corralation between Ontex Group and Capital Clean

Assuming the 90 days horizon Ontex Group is expected to generate 2.4 times less return on investment than Capital Clean. But when comparing it to its historical volatility, Ontex Group NV is 1.13 times less risky than Capital Clean. It trades about 0.02 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,303  in Capital Clean Energy on October 10, 2024 and sell it today you would earn a total of  521.00  from holding Capital Clean Energy or generate 39.98% return on investment over 90 days.

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

Ontex Group NV  vs.  Capital Clean Energy

Ontex Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ontex Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Capital Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Ontex Group and Capital Clean

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

The idea behind Ontex Group NV and Capital 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.