Correlation Between Danimer Scientific and CN Energy

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

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

Diversification Opportunities for Danimer Scientific and CN Energy

0.59

Correlation Coefficient

Danimer Scientific  CN Energy

Very weak diversification

The 3 months correlation between Danimer and CNEY is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific 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 Danimer Scientific i.e., Danimer Scientific and CN Energy go up and down completely randomly.

Pair Corralation between Danimer Scientific and CN Energy

Given the investment horizon of 90 days Danimer Scientific is expected to under-perform the CN Energy. But the stock apears to be less risky and, when comparing its historical volatility, Danimer Scientific is 5.4 times less risky than CN Energy. The stock trades about -0.12 of its potential returns per unit of risk. The CN Energy Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  29.00  in CN Energy Group on September 7, 2024 and sell it today you would earn a total of  6.00  from holding CN Energy Group or generate 20.69% return on investment over 90 days.

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

Danimer Scientific  vs.  CN Energy Group

Danimer Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danimer Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's primary 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.

CN Energy Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CN Energy Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, CN Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Danimer Scientific and CN Energy

The main advantage of trading using opposite Danimer Scientific and CN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danimer Scientific 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 Danimer Scientific 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.