Correlation Between Global Clean and AquaBounty Technologies

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

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

Diversification Opportunities for Global Clean and AquaBounty Technologies

-0.62

Correlation Coefficient

Global Clean  AquaBounty Technologies

Excellent diversification

The 3 months correlation between Global and AquaBounty is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy and AquaBounty Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AquaBounty Technologies and Global 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 Global Clean Energy are associated (or correlated) with AquaBounty Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AquaBounty Technologies has no effect on the direction of Global Clean i.e., Global Clean and AquaBounty Technologies go up and down completely randomly.

Pair Corralation between Global Clean and AquaBounty Technologies

Given the investment horizon of 90 days Global Clean Energy is expected to generate 2.61 times more return on investment than AquaBounty Technologies. However, Global Clean is 2.61 times more volatile than AquaBounty Technologies. It trades about 0.32 of its potential returns per unit of risk. AquaBounty Technologies is currently generating about -0.32 per unit of risk. If you would invest  90.00  in Global Clean Energy on September 25, 2024 and sell it today you would earn a total of  159.00  from holding Global Clean Energy or generate 176.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Global Clean Energy  vs.  AquaBounty Technologies

Global Clean Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Clean Energy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Global Clean demonstrated solid returns over the last few months and may actually be approaching a breakup point.

AquaBounty Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AquaBounty Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat 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.

Pair Trading with Global Clean and AquaBounty Technologies

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

The idea behind Global Clean Energy and AquaBounty Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.