Correlation Between Albemarle Corp and CN Energy

Can any of the company-specific risk be diversified away by investing in both Albemarle Corp and CN Energy 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 Albemarle Corp and CN Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Albemarle Corp and CN Energy Group, you can compare the effects of market volatilities on Albemarle Corp and CN Energy 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 Albemarle Corp with a short position of CN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Albemarle Corp and CN Energy.

Diversification Opportunities for Albemarle Corp and CN Energy

-0.24

Correlation Coefficient

Albemarle Corp  CN Energy

Very good diversification

The 3 months correlation between Albemarle and CNEY is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Albemarle Corp and CN Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN Energy Group and Albemarle Corp 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 Albemarle Corp are associated (or correlated) with CN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN Energy Group has no effect on the direction of Albemarle Corp i.e., Albemarle Corp and CN Energy go up and down completely randomly.

Pair Corralation between Albemarle Corp and CN Energy

Considering the 90-day investment horizon Albemarle Corp is expected to under-perform the CN Energy. But the stock apears to be less risky and, when comparing its historical volatility, Albemarle Corp is 7.0 times less risky than CN Energy. The stock trades about -0.02 of its potential returns per unit of risk. The CN Energy Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  267.00  in CN Energy Group on September 12, 2024 and sell it today you would lose (231.50) from holding CN Energy Group or give up 86.7% of portfolio value over 90 days.

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

Albemarle Corp  vs.  CN Energy Group

Albemarle Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Albemarle Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating essential indicators, Albemarle Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

CN Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CN Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, CN Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Albemarle Corp and CN Energy

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

The idea behind Albemarle Corp and CN Energy Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.