Correlation Between Secure Energy and Clean Harbors

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

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

Diversification Opportunities for Secure Energy and Clean Harbors

0.32

Correlation Coefficient

Secure Energy  Clean Harbors

Weak diversification

The 3 months correlation between Secure and Clean is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and Clean Harbors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Harbors and Secure Energy 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 Secure Energy Services are associated (or correlated) with Clean Harbors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Harbors has no effect on the direction of Secure Energy i.e., Secure Energy and Clean Harbors go up and down completely randomly.

Pair Corralation between Secure Energy and Clean Harbors

Assuming the 90 days horizon Secure Energy Services is expected to generate 0.98 times more return on investment than Clean Harbors. However, Secure Energy Services is 1.02 times less risky than Clean Harbors. It trades about 0.25 of its potential returns per unit of risk. Clean Harbors is currently generating about 0.02 per unit of risk. If you would invest  852.00  in Secure Energy Services on September 14, 2024 and sell it today you would earn a total of  334.00  from holding Secure Energy Services or generate 39.2% return on investment over 90 days.

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

Secure Energy Services  vs.  Clean Harbors

Secure Energy Services

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Secure Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Clean Harbors

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Harbors are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong essential indicators, Clean Harbors is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Secure Energy and Clean Harbors

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

The idea behind Secure Energy Services and Clean Harbors 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.