Correlation Between Air Transport and Carnegie Clean

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

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

Diversification Opportunities for Air Transport and Carnegie Clean

0.48

Correlation Coefficient

Air Transport  Carnegie Clean

Very weak diversification

The 3 months correlation between Air and Carnegie is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and Air Transport 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 Air Transport Services are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Air Transport i.e., Air Transport and Carnegie Clean go up and down completely randomly.

Pair Corralation between Air Transport and Carnegie Clean

Assuming the 90 days horizon Air Transport Services is expected to generate 1.36 times more return on investment than Carnegie Clean. However, Air Transport is 1.36 times more volatile than Carnegie Clean Energy. It trades about 0.2 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.02 per unit of risk. If you would invest  1,370  in Air Transport Services on September 17, 2024 and sell it today you would earn a total of  710.00  from holding Air Transport Services or generate 51.82% return on investment over 90 days.

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

Air Transport Services  vs.  Carnegie Clean Energy

Air Transport Services

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Transport reported solid returns over the last few months and may actually be approaching a breakup point.

Carnegie Clean Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Carnegie Clean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Transport and Carnegie Clean

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

The idea behind Air Transport Services and Carnegie 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.