Correlation Between C2E Energy and Southern ITS

Can any of the company-specific risk be diversified away by investing in both C2E Energy and Southern ITS 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 C2E Energy and Southern ITS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between C2E Energy and Southern ITS International, you can compare the effects of market volatilities on C2E Energy and Southern ITS 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 C2E Energy with a short position of Southern ITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of C2E Energy and Southern ITS.

Diversification Opportunities for C2E Energy and Southern ITS

0.0

Correlation Coefficient

C2E Energy  Southern ITS

Pay attention - limited upside

The 3 months correlation between C2E and Southern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding C2E Energy and Southern ITS International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern ITS Interna and C2E Energy 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 C2E Energy are associated (or correlated) with Southern ITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern ITS Interna has no effect on the direction of C2E Energy i.e., C2E Energy and Southern ITS go up and down completely randomly.

Pair Corralation between C2E Energy and Southern ITS

Given the investment horizon of 90 days C2E Energy is expected to generate 4.05 times more return on investment than Southern ITS. However, C2E Energy is 4.05 times more volatile than Southern ITS International. It trades about 0.07 of its potential returns per unit of risk. Southern ITS International is currently generating about 0.05 per unit of risk. If you would invest  1.49  in C2E Energy on October 26, 2024 and sell it today you would lose (1.47) from holding C2E Energy or give up 98.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

C2E Energy  vs.  Southern ITS International

C2E Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C2E Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, C2E Energy is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Southern ITS Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern ITS International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Southern ITS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with C2E Energy and Southern ITS

The main advantage of trading using opposite C2E Energy and Southern ITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C2E Energy position performs unexpectedly, Southern ITS 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 Southern ITS will offset losses from the drop in Southern ITS's long position.

The idea behind C2E Energy and Southern ITS International 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.