Correlation Between CLEAN ENERGY and SOGECLAIR

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

By analyzing existing cross correlation between CLEAN ENERGY FUELS and SOGECLAIR SA INH, you can compare the effects of market volatilities on CLEAN ENERGY and SOGECLAIR 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 CLEAN ENERGY with a short position of SOGECLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLEAN ENERGY and SOGECLAIR.

Diversification Opportunities for CLEAN ENERGY and SOGECLAIR

0.31

Correlation Coefficient

CLEAN ENERGY  SOGECLAIR

Weak diversification

The 3 months correlation between CLEAN and SOGECLAIR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CLEAN ENERGY FUELS and SOGECLAIR SA INH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOGECLAIR SA INH and CLEAN ENERGY 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 CLEAN ENERGY FUELS are associated (or correlated) with SOGECLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOGECLAIR SA INH has no effect on the direction of CLEAN ENERGY i.e., CLEAN ENERGY and SOGECLAIR go up and down completely randomly.

Pair Corralation between CLEAN ENERGY and SOGECLAIR

Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to generate 0.83 times more return on investment than SOGECLAIR. However, CLEAN ENERGY FUELS is 1.21 times less risky than SOGECLAIR. It trades about 0.18 of its potential returns per unit of risk. SOGECLAIR SA INH is currently generating about 0.11 per unit of risk. If you would invest  250.00  in CLEAN ENERGY FUELS on October 25, 2024 and sell it today you would earn a total of  29.00  from holding CLEAN ENERGY FUELS or generate 11.6% return on investment over 90 days.

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

CLEAN ENERGY FUELS  vs.  SOGECLAIR SA INH

CLEAN ENERGY FUELS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLEAN ENERGY FUELS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, CLEAN ENERGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

SOGECLAIR SA INH

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with CLEAN ENERGY and SOGECLAIR

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

The idea behind CLEAN ENERGY FUELS and SOGECLAIR SA INH 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.