Correlation Between Acme United and Consol Energy

Can any of the company-specific risk be diversified away by investing in both Acme United and Consol Energy 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 Acme United and Consol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Acme United and Consol Energy

0.52

Correlation Coefficient

Acme United  Consol Energy

Very weak diversification

The 3 months correlation between Acme and Consol is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Acme United 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 Acme United are associated (or correlated) with Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of Acme United i.e., Acme United and Consol Energy go up and down completely randomly.

Pair Corralation between Acme United and Consol Energy

Considering the 90-day investment horizon Acme United is expected to under-perform the Consol Energy. But the stock apears to be less risky and, when comparing its historical volatility, Acme United is 1.16 times less risky than Consol Energy. The stock trades about -0.08 of its potential returns per unit of risk. The Consol Energy is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,444  in Consol Energy on September 29, 2024 and sell it today you would lose (162.00) from holding Consol Energy or give up 1.55% of portfolio value over 90 days.

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

Acme United  vs.  Consol Energy

Acme United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acme United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Consol Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consol Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Consol Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Acme United and Consol Energy

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

The idea behind Acme United and Consol 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.