Correlation Between Valens and Capital Clean

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

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

Diversification Opportunities for Valens and Capital Clean

-0.2

Correlation Coefficient

Valens  Capital Clean

Good diversification

The 3 months correlation between Valens and Capital is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Valens and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and Valens 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 Valens are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of Valens i.e., Valens and Capital Clean go up and down completely randomly.

Pair Corralation between Valens and Capital Clean

Considering the 90-day investment horizon Valens is expected to generate 2.93 times more return on investment than Capital Clean. However, Valens is 2.93 times more volatile than Capital Clean Energy. It trades about 0.06 of its potential returns per unit of risk. Capital Clean Energy is currently generating about 0.0 per unit of risk. If you would invest  220.00  in Valens on September 29, 2024 and sell it today you would earn a total of  29.00  from holding Valens or generate 13.18% return on investment over 90 days.

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

Valens  vs.  Capital Clean Energy

Valens

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens displayed solid returns over the last few months and may actually be approaching a breakup point.

Capital Clean Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Capital Clean is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Valens and Capital Clean

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

The idea behind Valens and Capital Clean 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.