Correlation Between Clean Carbon and ECC Games

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

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

Diversification Opportunities for Clean Carbon and ECC Games

0.61

Correlation Coefficient

Clean Carbon  ECC Games

Poor diversification

The 3 months correlation between Clean and ECC is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Clean Carbon Energy and ECC Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECC Games SA and Clean 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 Clean Carbon Energy are associated (or correlated) with ECC Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECC Games SA has no effect on the direction of Clean Carbon i.e., Clean Carbon and ECC Games go up and down completely randomly.

Pair Corralation between Clean Carbon and ECC Games

Assuming the 90 days trading horizon Clean Carbon Energy is expected to under-perform the ECC Games. But the stock apears to be less risky and, when comparing its historical volatility, Clean Carbon Energy is 1.13 times less risky than ECC Games. The stock trades about -0.08 of its potential returns per unit of risk. The ECC Games SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  53.00  in ECC Games SA on September 12, 2024 and sell it today you would lose (8.00) from holding ECC Games SA or give up 15.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	85.48%
Values	Daily Returns

Clean Carbon Energy  vs.  ECC Games SA

Clean Carbon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Carbon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ECC Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECC Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ECC Games is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Clean Carbon and ECC Games

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

The idea behind Clean Carbon Energy and ECC Games SA 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.