Correlation Between Carnegie Clean and Astra Energy

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

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

Diversification Opportunities for Carnegie Clean and Astra Energy

0.42

Correlation Coefficient

Carnegie Clean  Astra Energy

Very weak diversification

The 3 months correlation between Carnegie and Astra is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Carnegie Clean Energy and Astra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Energy and Carnegie Clean 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 Carnegie Clean Energy are associated (or correlated) with Astra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Energy has no effect on the direction of Carnegie Clean i.e., Carnegie Clean and Astra Energy go up and down completely randomly.

Pair Corralation between Carnegie Clean and Astra Energy

Assuming the 90 days horizon Carnegie Clean Energy is expected to generate 1.63 times more return on investment than Astra Energy. However, Carnegie Clean is 1.63 times more volatile than Astra Energy. It trades about 0.06 of its potential returns per unit of risk. Astra Energy is currently generating about 0.01 per unit of risk. If you would invest  2.53  in Carnegie Clean Energy on September 3, 2024 and sell it today you would earn a total of  0.14  from holding Carnegie Clean Energy or generate 5.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Carnegie Clean Energy  vs.  Astra Energy

Carnegie Clean Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Carnegie Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Astra Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Astra Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Carnegie Clean and Astra Energy

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

The idea behind Carnegie Clean Energy and Astra 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.