Correlation Between Secure Energy and CHAR Technologies

Can any of the company-specific risk be diversified away by investing in both Secure Energy and CHAR 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 Secure Energy and CHAR Technologies 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 CHAR Technologies, you can compare the effects of market volatilities on Secure Energy and CHAR 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 Secure Energy with a short position of CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Secure Energy and CHAR Technologies.

Diversification Opportunities for Secure Energy and CHAR Technologies

-0.82

Correlation Coefficient

Secure Energy  CHAR Technologies

Pay attention - limited upside

The 3 months correlation between Secure and CHAR is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Secure Energy Services and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies 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 CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Secure Energy i.e., Secure Energy and CHAR Technologies go up and down completely randomly.

Pair Corralation between Secure Energy and CHAR Technologies

Assuming the 90 days trading horizon Secure Energy Services is expected to generate 0.41 times more return on investment than CHAR Technologies. However, Secure Energy Services is 2.43 times less risky than CHAR Technologies. It trades about 0.23 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.11 per unit of risk. If you would invest  1,213  in Secure Energy Services on September 28, 2024 and sell it today you would earn a total of  386.00  from holding Secure Energy Services or generate 31.82% return on investment over 90 days.

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

Secure Energy Services  vs.  CHAR Technologies

Secure Energy Services

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Secure Energy Services are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Secure Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Secure Energy and CHAR Technologies

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

The idea behind Secure Energy Services and CHAR 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.