Correlation Between Alternus Energy and Clearway Energy

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

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

Diversification Opportunities for Alternus Energy and Clearway Energy

0.0

Correlation Coefficient

Alternus Energy  Clearway Energy

Pay attention - limited upside

The 3 months correlation between Alternus and Clearway is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alternus Energy Group and Clearway Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy and Alternus 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 Alternus Energy Group are associated (or correlated) with Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy has no effect on the direction of Alternus Energy i.e., Alternus Energy and Clearway Energy go up and down completely randomly.

Pair Corralation between Alternus Energy and Clearway Energy

Assuming the 90 days horizon Alternus Energy Group is expected to generate 32.69 times more return on investment than Clearway Energy. However, Alternus Energy is 32.69 times more volatile than Clearway Energy. It trades about 0.07 of its potential returns per unit of risk. Clearway Energy is currently generating about 0.01 per unit of risk. If you would invest  0.00  in Alternus Energy Group on September 3, 2024 and sell it today you would earn a total of  52.00  from holding Alternus Energy Group or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Alternus Energy Group  vs.  Clearway Energy

Alternus Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alternus Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alternus Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Clearway Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Clearway Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alternus Energy and Clearway Energy

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

The idea behind Alternus Energy Group and Clearway 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.