Correlation Between PM Capital and Carnegie Clean

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

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

Diversification Opportunities for PM Capital and Carnegie Clean

-0.05

Correlation Coefficient

PM Capital  Carnegie Clean

Good diversification

The 3 months correlation between PGF and Carnegie is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding PM Capital Global and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and PM Capital 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 PM Capital Global are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of PM Capital i.e., PM Capital and Carnegie Clean go up and down completely randomly.

Pair Corralation between PM Capital and Carnegie Clean

Assuming the 90 days trading horizon PM Capital Global is expected to generate 0.38 times more return on investment than Carnegie Clean. However, PM Capital Global is 2.6 times less risky than Carnegie Clean. It trades about 0.16 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about -0.03 per unit of risk. If you would invest  218.00  in PM Capital Global on December 30, 2024 and sell it today you would earn a total of  37.00  from holding PM Capital Global or generate 16.97% return on investment over 90 days.

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

PM Capital Global  vs.  Carnegie Clean Energy

PM Capital Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PM Capital Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, PM Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carnegie Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnegie Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PM Capital and Carnegie Clean

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

The idea behind PM Capital Global and Carnegie 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.