Correlation Between Aker Carbon and Cloudberry Clean

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

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

Diversification Opportunities for Aker Carbon and Cloudberry Clean

0.34

Correlation Coefficient

Aker Carbon  Cloudberry Clean

Weak diversification

The 3 months correlation between Aker and Cloudberry is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Cloudberry Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudberry Clean Energy and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Cloudberry Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudberry Clean Energy has no effect on the direction of Aker Carbon i.e., Aker Carbon and Cloudberry Clean go up and down completely randomly.

Pair Corralation between Aker Carbon and Cloudberry Clean

Assuming the 90 days trading horizon Aker Carbon Capture is expected to generate 1.01 times more return on investment than Cloudberry Clean. However, Aker Carbon is 1.01 times more volatile than Cloudberry Clean Energy. It trades about 0.02 of its potential returns per unit of risk. Cloudberry Clean Energy is currently generating about -0.08 per unit of risk. If you would invest  590.00  in Aker Carbon Capture on September 3, 2024 and sell it today you would earn a total of  7.00  from holding Aker Carbon Capture or generate 1.19% return on investment over 90 days.

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

Aker Carbon Capture  vs.  Cloudberry Clean Energy

Aker Carbon Capture

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Carbon Capture are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Aker Carbon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cloudberry Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloudberry Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aker Carbon and Cloudberry Clean

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

The idea behind Aker Carbon Capture and Cloudberry Clean Energy 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.