Correlation Between ENELIM and Capital Clean

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

By analyzing existing cross correlation between ENELIM 71 14 OCT 27 and Capital Clean Energy, you can compare the effects of market volatilities on ENELIM and Capital 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 ENELIM with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of ENELIM and Capital Clean.

Diversification Opportunities for ENELIM and Capital Clean

0.11

Correlation Coefficient

ENELIM  Capital Clean

Average diversification

The 3 months correlation between ENELIM and Capital is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ENELIM 71 14 OCT 27 and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and ENELIM 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 ENELIM 71 14 OCT 27 are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of ENELIM i.e., ENELIM and Capital Clean go up and down completely randomly.

Pair Corralation between ENELIM and Capital Clean

Assuming the 90 days trading horizon ENELIM 71 14 OCT 27 is expected to generate 0.68 times more return on investment than Capital Clean. However, ENELIM 71 14 OCT 27 is 1.47 times less risky than Capital Clean. It trades about 0.71 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.08 per unit of risk. If you would invest  10,509  in ENELIM 71 14 OCT 27 on October 15, 2024 and sell it today you would earn a total of  116.00  from holding ENELIM 71 14 OCT 27 or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	11.11%
Values	Daily Returns

ENELIM 71 14 OCT 27  vs.  Capital Clean Energy

ENELIM 71 14

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENELIM 71 14 OCT 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ENELIM is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ENELIM and Capital Clean

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

The idea behind ENELIM 71 14 OCT 27 and Capital 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.