Correlation Between CHAR Technologies and Northstar Clean

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

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

Diversification Opportunities for CHAR Technologies and Northstar Clean

-0.01

Correlation Coefficient

CHAR Technologies  Northstar Clean

Good diversification

The 3 months correlation between CHAR and Northstar is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CHAR Technologies and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and CHAR Technologies 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 CHAR Technologies are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of CHAR Technologies i.e., CHAR Technologies and Northstar Clean go up and down completely randomly.

Pair Corralation between CHAR Technologies and Northstar Clean

Assuming the 90 days horizon CHAR Technologies is expected to under-perform the Northstar Clean. In addition to that, CHAR Technologies is 1.53 times more volatile than Northstar Clean Technologies. It trades about -0.01 of its total potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.08 per unit of volatility. If you would invest  31.00  in Northstar Clean Technologies on December 2, 2024 and sell it today you would earn a total of  5.00  from holding Northstar Clean Technologies or generate 16.13% return on investment over 90 days.

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

CHAR Technologies  vs.  Northstar Clean Technologies

CHAR Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CHAR Technologies is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Northstar Clean Tech

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHAR Technologies and Northstar Clean

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

The idea behind CHAR Technologies and Northstar Clean Technologies 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.