Correlation Between Northstar Clean and Cirmaker Technology

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

By analyzing existing cross correlation between Northstar Clean Technologies and Cirmaker Technology, you can compare the effects of market volatilities on Northstar Clean and Cirmaker Technology 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 Northstar Clean with a short position of Cirmaker Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Cirmaker Technology.

Diversification Opportunities for Northstar Clean and Cirmaker Technology

0.23

Correlation Coefficient

Northstar Clean  Cirmaker Technology

Modest diversification

The 3 months correlation between Northstar and Cirmaker is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Cirmaker Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirmaker Technology and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Cirmaker Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirmaker Technology has no effect on the direction of Northstar Clean i.e., Northstar Clean and Cirmaker Technology go up and down completely randomly.

Pair Corralation between Northstar Clean and Cirmaker Technology

Assuming the 90 days horizon Northstar Clean is expected to generate 4.61 times less return on investment than Cirmaker Technology. But when comparing it to its historical volatility, Northstar Clean Technologies is 8.25 times less risky than Cirmaker Technology. It trades about 0.06 of its potential returns per unit of risk. Cirmaker Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3.30  in Cirmaker Technology on October 25, 2024 and sell it today you would earn a total of  2.10  from holding Cirmaker Technology or generate 63.64% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  Cirmaker Technology

Northstar Clean Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Cirmaker Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cirmaker Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, Cirmaker Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northstar Clean and Cirmaker Technology

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

The idea behind Northstar Clean Technologies and Cirmaker Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.