Correlation Between OIL EQUIPMENT and Capstone Green

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

Diversification Opportunities for OIL EQUIPMENT and Capstone Green

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between OEPIX and Capstone is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding OIL EQUIPMENT SERVICES and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy and OIL EQUIPMENT 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 OIL EQUIPMENT SERVICES are associated (or correlated) with Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of OIL EQUIPMENT i.e., OIL EQUIPMENT and Capstone Green go up and down completely randomly.

Pair Corralation between OIL EQUIPMENT and Capstone Green

Assuming the 90 days horizon OIL EQUIPMENT SERVICES is expected to generate 0.76 times more return on investment than Capstone Green. However, OIL EQUIPMENT SERVICES is 1.32 times less risky than Capstone Green. It trades about 0.05 of its potential returns per unit of risk. Capstone Green Energy is currently generating about -0.03 per unit of risk. If you would invest  6,092  in OIL EQUIPMENT SERVICES on November 4, 2022 and sell it today you would earn a total of  4,918  from holding OIL EQUIPMENT SERVICES or generate 80.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

OIL EQUIPMENT SERVICES  vs.  Capstone Green Energy

 Performance (%) 
       Timeline  
OIL EQUIPMENT SERVICES 
OEPIX Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OIL EQUIPMENT SERVICES are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly uncertain forward indicators, OIL EQUIPMENT showed solid returns over the last few months and may actually be approaching a breakup point.

OEPIX Price Channel

Capstone Green Energy 
Capstone Performance
0 of 100
Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Capstone Green is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Capstone Price Channel

OIL EQUIPMENT and Capstone Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OIL EQUIPMENT and Capstone Green

The main advantage of trading using opposite OIL EQUIPMENT and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OIL EQUIPMENT position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.
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The idea behind OIL EQUIPMENT SERVICES and Capstone Green 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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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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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