Correlation Between Group Eleven and Clean Air

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

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

Diversification Opportunities for Group Eleven and Clean Air

0.55

Correlation Coefficient

Group Eleven  Clean Air

Very weak diversification

The 3 months correlation between Group and Clean is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Group Eleven Resources and Clean Air Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Air Metals and Group Eleven 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 Group Eleven Resources are associated (or correlated) with Clean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Air Metals has no effect on the direction of Group Eleven i.e., Group Eleven and Clean Air go up and down completely randomly.

Pair Corralation between Group Eleven and Clean Air

Assuming the 90 days horizon Group Eleven Resources is expected to generate 1.51 times more return on investment than Clean Air. However, Group Eleven is 1.51 times more volatile than Clean Air Metals. It trades about 0.03 of its potential returns per unit of risk. Clean Air Metals is currently generating about 0.02 per unit of risk. If you would invest  17.00  in Group Eleven Resources on October 22, 2024 and sell it today you would earn a total of  0.00  from holding Group Eleven Resources or generate 0.0% return on investment over 90 days.

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

Group Eleven Resources  vs.  Clean Air Metals

Group Eleven Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Group Eleven Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Clean Air Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Air Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Group Eleven and Clean Air

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

The idea behind Group Eleven Resources and Clean Air Metals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .