Correlation Between C E and Advanced Emissions

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Can any of the company-specific risk be diversified away by investing in both C E and Advanced Emissions 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 C E and Advanced Emissions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C E C and Advanced Emissions Solutions, you can compare the effects of market volatilities on C E and Advanced Emissions 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 C E with a short position of Advanced Emissions. Check out your portfolio center. Please also check ongoing floating volatility patterns of C E and Advanced Emissions.

Diversification Opportunities for C E and Advanced Emissions

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between C E and Advanced is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding C E C and Advanced Emissions Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Emissions and C E 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 C E C are associated (or correlated) with Advanced Emissions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Emissions has no effect on the direction of C E i.e., C E and Advanced Emissions go up and down completely randomly.

Pair Corralation between C E and Advanced Emissions

Given the investment horizon of 90 days C E C is expected to generate 0.74 times more return on investment than Advanced Emissions. However, C E C is 1.34 times less risky than Advanced Emissions. It trades about 0.62 of its potential returns per unit of risk. Advanced Emissions Solutions is currently generating about 0.29 per unit of risk. If you would invest  634.00  in C E C on May 18, 2022 and sell it today you would earn a total of  357.00  from holding C E C or generate 56.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

C E C  vs.  Advanced Emissions Solutions

 Performance (%) 
       Timeline  
C E C 
C E Performance
22 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in C E C are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, C E exhibited solid returns over the last few months and may actually be approaching a breakup point.

C E Price Channel

Advanced Emissions 
Advanced Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Emissions Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Advanced Emissions reported solid returns over the last few months and may actually be approaching a breakup point.

Advanced Price Channel

C E and Advanced Emissions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with C E and Advanced Emissions

The main advantage of trading using opposite C E and Advanced Emissions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C E position performs unexpectedly, Advanced Emissions 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 Advanced Emissions will offset losses from the drop in Advanced Emissions' long position.
The idea behind C E C and Advanced Emissions Solutions 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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