Correlation Between CLEAN ENERGY and CSSC Offshore

Can any of the company-specific risk be diversified away by investing in both CLEAN ENERGY and CSSC Offshore 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 CSSC Offshore 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 CSSC Offshore Marine, you can compare the effects of market volatilities on CLEAN ENERGY and CSSC Offshore 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 CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of CLEAN ENERGY and CSSC Offshore.

Diversification Opportunities for CLEAN ENERGY and CSSC Offshore

-0.23

Correlation Coefficient

CLEAN ENERGY  CSSC Offshore

Very good diversification

The 3 months correlation between CLEAN and CSSC is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CLEAN ENERGY FUELS and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine 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 CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of CLEAN ENERGY i.e., CLEAN ENERGY and CSSC Offshore go up and down completely randomly.

Pair Corralation between CLEAN ENERGY and CSSC Offshore

Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to generate 1.45 times more return on investment than CSSC Offshore. However, CLEAN ENERGY is 1.45 times more volatile than CSSC Offshore Marine. It trades about 0.04 of its potential returns per unit of risk. CSSC Offshore Marine is currently generating about -0.1 per unit of risk. If you would invest  263.00  in CLEAN ENERGY FUELS on October 26, 2024 and sell it today you would earn a total of  14.00  from holding CLEAN ENERGY FUELS or generate 5.32% return on investment over 90 days.

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

CLEAN ENERGY FUELS  vs.  CSSC Offshore Marine

CLEAN ENERGY FUELS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CLEAN ENERGY FUELS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, CLEAN ENERGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CSSC Offshore Marine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSSC Offshore Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CLEAN ENERGY and CSSC Offshore

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

The idea behind CLEAN ENERGY FUELS and CSSC Offshore Marine 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.