Correlation Between Vow ASA and ClearSign Combustion

Can any of the company-specific risk be diversified away by investing in both Vow ASA and ClearSign Combustion 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 Vow ASA and ClearSign Combustion into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vow ASA and ClearSign Combustion, you can compare the effects of market volatilities on Vow ASA and ClearSign Combustion 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 Vow ASA with a short position of ClearSign Combustion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and ClearSign Combustion.

Diversification Opportunities for Vow ASA and ClearSign Combustion

0.42

Correlation Coefficient

Vow ASA  ClearSign Combustion

Very weak diversification

The 3 months correlation between Vow and ClearSign is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion and Vow ASA 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 Vow ASA are associated (or correlated) with ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Vow ASA i.e., Vow ASA and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Vow ASA and ClearSign Combustion

Assuming the 90 days horizon Vow ASA is expected to generate 1.06 times more return on investment than ClearSign Combustion. However, Vow ASA is 1.06 times more volatile than ClearSign Combustion. It trades about 0.05 of its potential returns per unit of risk. ClearSign Combustion is currently generating about -0.16 per unit of risk. If you would invest  16.00  in Vow ASA on December 29, 2024 and sell it today you would earn a total of  1.00  from holding Vow ASA or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Vow ASA  vs.  ClearSign Combustion

Vow ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vow ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Vow ASA reported solid returns over the last few months and may actually be approaching a breakup point.

ClearSign Combustion

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vow ASA and ClearSign Combustion

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

The idea behind Vow ASA and ClearSign Combustion 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.