Correlation Between Coroware and CN Energy

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Can any of the company-specific risk be diversified away by investing in both Coroware and CN 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 Coroware and CN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coroware and CN Energy Group, you can compare the effects of market volatilities on Coroware and CN 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 Coroware with a short position of CN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coroware and CN Energy.

Diversification Opportunities for Coroware and CN Energy

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Coroware and CNEY is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Coroware and CN Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN Energy Group and Coroware 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 Coroware are associated (or correlated) with CN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN Energy Group has no effect on the direction of Coroware i.e., Coroware and CN Energy go up and down completely randomly.

Pair Corralation between Coroware and CN Energy

Given the investment horizon of 90 days Coroware is expected to generate 19.01 times more return on investment than CN Energy. However, Coroware is 19.01 times more volatile than CN Energy Group. It trades about 0.26 of its potential returns per unit of risk. CN Energy Group is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Coroware on September 11, 2024 and sell it today you would lose (0.01) from holding Coroware or give up 100.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Coroware  vs.  CN Energy Group

 Performance 
       Timeline  
Coroware 

Risk-Adjusted Performance

32 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Coroware are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting basic indicators, Coroware demonstrated solid returns over the last few months and may actually be approaching a breakup point.
CN Energy Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days CN Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Coroware and CN Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Coroware and CN Energy

The main advantage of trading using opposite Coroware and CN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coroware position performs unexpectedly, CN 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 CN Energy will offset losses from the drop in CN Energy's long position.
The idea behind Coroware and CN Energy Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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