Correlation Between ClearSign Combustion and Bushveld Minerals

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

Diversification Opportunities for ClearSign Combustion and Bushveld Minerals

  Correlation Coefficient

Significant diversification

The 3 months correlation between ClearSign and Bushveld is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Bushveld Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bushveld Minerals and ClearSign Combustion 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 ClearSign Combustion are associated (or correlated) with Bushveld Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bushveld Minerals has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Bushveld Minerals go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Bushveld Minerals

Given the investment horizon of 90 days ClearSign Combustion is expected to under-perform the Bushveld Minerals. But the stock apears to be less risky and, when comparing its historical volatility, ClearSign Combustion is 3.31 times less risky than Bushveld Minerals. The stock trades about -0.01 of its potential returns per unit of risk. The Bushveld Minerals Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Bushveld Minerals Limited on September 4, 2022 and sell it today you would lose (3.00)  from holding Bushveld Minerals Limited or give up 30.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

ClearSign Combustion  vs.  Bushveld Minerals Limited

 Performance (%) 
ClearSign Combustion 
ClearSign Performance
0 of 100
Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

ClearSign Price Channel

Bushveld Minerals 
Bushveld Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bushveld Minerals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Bushveld Minerals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bushveld Price Channel

ClearSign Combustion and Bushveld Minerals Volatility Contrast

   Predicted Return Density   

Pair Trading with ClearSign Combustion and Bushveld Minerals

The main advantage of trading using opposite ClearSign Combustion and Bushveld Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearSign Combustion position performs unexpectedly, Bushveld Minerals 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 Bushveld Minerals will offset losses from the drop in Bushveld Minerals' long position.
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The idea behind ClearSign Combustion and Bushveld Minerals Limited 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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