Correlation Between Verde Clean and Ocean Thermal

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

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

Diversification Opportunities for Verde Clean and Ocean Thermal

0.07

Correlation Coefficient

Verde Clean  Ocean Thermal

Significant diversification

The 3 months correlation between Verde and Ocean is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Verde Clean Fuels and Ocean Thermal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Thermal Energy and Verde 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 Verde Clean Fuels are associated (or correlated) with Ocean Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Thermal Energy has no effect on the direction of Verde Clean i.e., Verde Clean and Ocean Thermal go up and down completely randomly.

Pair Corralation between Verde Clean and Ocean Thermal

If you would invest  21.00  in Verde Clean Fuels on August 31, 2024 and sell it today you would earn a total of  4.00  from holding Verde Clean Fuels or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.79%
Values	Daily Returns

Verde Clean Fuels  vs.  Ocean Thermal Energy

Verde Clean Fuels

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Verde Clean Fuels are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Verde Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Ocean Thermal Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Thermal Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Ocean Thermal is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Verde Clean and Ocean Thermal

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

The idea behind Verde Clean Fuels and Ocean Thermal 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.