Correlation Between CleanCore Solutions and Fuel Tech

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

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

Diversification Opportunities for CleanCore Solutions and Fuel Tech

0.13

Correlation Coefficient

CleanCore Solutions  Fuel Tech

Average diversification

The 3 months correlation between CleanCore and Fuel is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding CleanCore Solutions and Fuel Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuel Tech and CleanCore Solutions 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 CleanCore Solutions are associated (or correlated) with Fuel Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuel Tech has no effect on the direction of CleanCore Solutions i.e., CleanCore Solutions and Fuel Tech go up and down completely randomly.

Pair Corralation between CleanCore Solutions and Fuel Tech

Given the investment horizon of 90 days CleanCore Solutions is expected to under-perform the Fuel Tech. In addition to that, CleanCore Solutions is 3.8 times more volatile than Fuel Tech. It trades about -0.03 of its total potential returns per unit of risk. Fuel Tech is currently generating about -0.04 per unit of volatility. If you would invest  108.00  in Fuel Tech on September 20, 2024 and sell it today you would lose (7.00) from holding Fuel Tech or give up 6.48% of portfolio value over 90 days.

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

CleanCore Solutions  vs.  Fuel Tech

CleanCore Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CleanCore Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fuel Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuel Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Fuel Tech is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CleanCore Solutions and Fuel Tech

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

The idea behind CleanCore Solutions and Fuel Tech 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.