Correlation Between TRAINLINE PLC and ALERION CLEANPOWER

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and ALERION CLEANPOWER 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 TRAINLINE PLC and ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRAINLINE PLC LS and ALERION CLEANPOWER, you can compare the effects of market volatilities on TRAINLINE PLC and ALERION CLEANPOWER 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 TRAINLINE PLC with a short position of ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and ALERION CLEANPOWER.

Diversification Opportunities for TRAINLINE PLC and ALERION CLEANPOWER

-0.18

Correlation Coefficient

TRAINLINE PLC  ALERION CLEANPOWER

Good diversification

The 3 months correlation between TRAINLINE and ALERION is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and ALERION CLEANPOWER go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and ALERION CLEANPOWER

Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to under-perform the ALERION CLEANPOWER. But the stock apears to be less risky and, when comparing its historical volatility, TRAINLINE PLC LS is 1.4 times less risky than ALERION CLEANPOWER. The stock trades about -0.01 of its potential returns per unit of risk. The ALERION CLEANPOWER is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,402  in ALERION CLEANPOWER on April 24, 2025 and sell it today you would earn a total of  738.00  from holding ALERION CLEANPOWER or generate 52.64% return on investment over 90 days.

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

TRAINLINE PLC LS  vs.  ALERION CLEANPOWER

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ALERION CLEANPOWER

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALERION CLEANPOWER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TRAINLINE PLC and ALERION CLEANPOWER

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

The idea behind TRAINLINE PLC LS and ALERION CLEANPOWER 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.