Correlation Between SES AI and Carbon Revolution

Can any of the company-specific risk be diversified away by investing in both SES AI and Carbon Revolution 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 SES AI and Carbon Revolution into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SES AI Corp and Carbon Revolution Public, you can compare the effects of market volatilities on SES AI and Carbon Revolution 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 SES AI with a short position of Carbon Revolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES AI and Carbon Revolution.

Diversification Opportunities for SES AI and Carbon Revolution

0.83

Correlation Coefficient

SES AI  Carbon Revolution

Very poor diversification

The 3 months correlation between SES and Carbon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SES AI Corp and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public and SES AI 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 SES AI Corp are associated (or correlated) with Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of SES AI i.e., SES AI and Carbon Revolution go up and down completely randomly.

Pair Corralation between SES AI and Carbon Revolution

Considering the 90-day investment horizon SES AI Corp is expected to generate 0.86 times more return on investment than Carbon Revolution. However, SES AI Corp is 1.17 times less risky than Carbon Revolution. It trades about 0.04 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about 0.0 per unit of risk. If you would invest  213.00  in SES AI Corp on October 3, 2024 and sell it today you would earn a total of  6.00  from holding SES AI Corp or generate 2.82% return on investment over 90 days.

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

SES AI Corp  vs.  Carbon Revolution Public

SES AI Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SES AI Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, SES AI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Carbon Revolution Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carbon Revolution Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Carbon Revolution showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SES AI and Carbon Revolution

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

The idea behind SES AI Corp and Carbon Revolution Public 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 Global Correlations module to find global opportunities by holding instruments from different markets.