Correlation Between ClearSign Combustion and Evoqua Water

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

By analyzing existing cross correlation between ClearSign Combustion and Evoqua Water Technologies, you can compare the effects of market volatilities on ClearSign Combustion and Evoqua Water 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 Evoqua Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearSign Combustion and Evoqua Water.

Diversification Opportunities for ClearSign Combustion and Evoqua Water

-0.04

Correlation Coefficient

ClearSign Combustion  Evoqua Water

Good diversification

The 3 months correlation between ClearSign and Evoqua is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Evoqua Water Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evoqua Water Technologies 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 Evoqua Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evoqua Water Technologies has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Evoqua Water go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Evoqua Water

Given the investment horizon of 90 days ClearSign Combustion is expected to generate 1.35 times less return on investment than Evoqua Water. In addition to that, ClearSign Combustion is 2.07 times more volatile than Evoqua Water Technologies. It trades about 0.01 of its total potential returns per unit of risk. Evoqua Water Technologies is currently generating about 0.04 per unit of volatility. If you would invest  4,229  in Evoqua Water Technologies on January 20, 2024 and sell it today you would earn a total of  759.00  from holding Evoqua Water Technologies or generate 17.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.14%
Values	Daily Returns

ClearSign Combustion  vs.  Evoqua Water Technologies

ClearSign Combustion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Evoqua Water Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evoqua Water Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Evoqua Water is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ClearSign Combustion and Evoqua Water

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

The idea behind ClearSign Combustion and Evoqua Water Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.