Correlation Between ClearSign Combustion and 374Water Common

Can any of the company-specific risk be diversified away by investing in both ClearSign Combustion and 374Water Common 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 374Water Common into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ClearSign Combustion and 374Water Common Stock, you can compare the effects of market volatilities on ClearSign Combustion and 374Water Common 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 374Water Common. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearSign Combustion and 374Water Common.

Diversification Opportunities for ClearSign Combustion and 374Water Common

-0.2

Correlation Coefficient

ClearSign Combustion  374Water Common

Good diversification

The 3 months correlation between ClearSign and 374Water is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and 374Water Common Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 374Water Common Stock 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 374Water Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 374Water Common Stock has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and 374Water Common go up and down completely randomly.

Pair Corralation between ClearSign Combustion and 374Water Common

Given the investment horizon of 90 days ClearSign Combustion is expected to under-perform the 374Water Common. But the stock apears to be less risky and, when comparing its historical volatility, ClearSign Combustion is 1.08 times less risky than 374Water Common. The stock trades about -0.03 of its potential returns per unit of risk. The 374Water Common Stock is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  125.00  in 374Water Common Stock on February 20, 2024 and sell it today you would earn a total of  4.00  from holding 374Water Common Stock or generate 3.2% return on investment over 90 days.

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

ClearSign Combustion  vs.  374Water Common Stock

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 conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

374Water Common Stock

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 374Water Common Stock are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, 374Water Common displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ClearSign Combustion and 374Water Common

The main advantage of trading using opposite ClearSign Combustion and 374Water Common positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearSign Combustion position performs unexpectedly, 374Water Common 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 374Water Common will offset losses from the drop in 374Water Common's long position.

The idea behind ClearSign Combustion and 374Water Common Stock 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..