Correlation Between THORNEY TECHS and Clean Energy

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

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

Diversification Opportunities for THORNEY TECHS and Clean Energy

0.0

Correlation Coefficient

THORNEY TECHS  Clean Energy

Pay attention - limited upside

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

Pair Corralation between THORNEY TECHS and Clean Energy

Assuming the 90 days horizon THORNEY TECHS LTD is expected to under-perform the Clean Energy. In addition to that, THORNEY TECHS is 1.4 times more volatile than Clean Energy Fuels. It trades about -0.01 of its total potential returns per unit of risk. Clean Energy Fuels is currently generating about -0.01 per unit of volatility. If you would invest  409.00  in Clean Energy Fuels on October 5, 2024 and sell it today you would lose (162.00) from holding Clean Energy Fuels or give up 39.61% of portfolio value over 90 days.

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

THORNEY TECHS LTD  vs.  Clean Energy Fuels

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THORNEY TECHS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, THORNEY TECHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Clean Energy Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Energy Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Clean Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THORNEY TECHS and Clean Energy

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

The idea behind THORNEY TECHS LTD and Clean Energy Fuels 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.