Correlation Between Verde Clean and CleanGo Innovations

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

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

Diversification Opportunities for Verde Clean and CleanGo Innovations

-0.51

Correlation Coefficient

Verde Clean  CleanGo Innovations

Excellent diversification

The 3 months correlation between Verde and CleanGo is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and CleanGo Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanGo Innovations and Verde 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 Verde Clean Fuels are associated (or correlated) with CleanGo Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanGo Innovations has no effect on the direction of Verde Clean i.e., Verde Clean and CleanGo Innovations go up and down completely randomly.

Pair Corralation between Verde Clean and CleanGo Innovations

Given the investment horizon of 90 days Verde Clean Fuels is expected to under-perform the CleanGo Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Verde Clean Fuels is 2.17 times less risky than CleanGo Innovations. The stock trades about -0.09 of its potential returns per unit of risk. The CleanGo Innovations is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  32.00  in CleanGo Innovations on October 10, 2024 and sell it today you would earn a total of  0.00  from holding CleanGo Innovations or generate 0.0% return on investment over 90 days.

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

Verde Clean Fuels  vs.  CleanGo Innovations

Verde Clean Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verde Clean Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Verde Clean is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CleanGo Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CleanGo Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CleanGo Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Verde Clean and CleanGo Innovations

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

The idea behind Verde Clean Fuels and CleanGo Innovations 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.