Correlation Between Clean Energy and Amphenol

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

Diversification Opportunities for Clean Energy and Amphenol

0.27

Correlation Coefficient

Clean Energy  Amphenol

Modest diversification

The 3 months correlation between Clean and Amphenol is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Clean Energy Fuels and Amphenol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amphenol 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 Amphenol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amphenol has no effect on the direction of Clean Energy i.e., Clean Energy and Amphenol go up and down completely randomly.

Pair Corralation between Clean Energy and Amphenol

Assuming the 90 days horizon Clean Energy is expected to generate 1.1 times less return on investment than Amphenol. In addition to that, Clean Energy is 1.73 times more volatile than Amphenol. It trades about 0.16 of its total potential returns per unit of risk. Amphenol is currently generating about 0.29 per unit of volatility. If you would invest  6,775  in Amphenol on October 26, 2024 and sell it today you would earn a total of  765.00  from holding Amphenol or generate 11.29% 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.  Amphenol

Clean Energy Fuels

Risk-Adjusted Performance

3 of 100

Modest

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. Despite nearly fragile basic indicators, Clean Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amphenol

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amphenol are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Amphenol reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clean Energy and Amphenol

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

The idea behind Clean Energy Fuels and Amphenol 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.