Correlation Between SHELF DRILLING and Carnegie Clean

Can any of the company-specific risk be diversified away by investing in both SHELF DRILLING and Carnegie Clean 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 SHELF DRILLING and Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHELF DRILLING LTD and Carnegie Clean Energy, you can compare the effects of market volatilities on SHELF DRILLING and Carnegie Clean 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 SHELF DRILLING with a short position of Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHELF DRILLING and Carnegie Clean.

Diversification Opportunities for SHELF DRILLING and Carnegie Clean

0.73

Correlation Coefficient

SHELF DRILLING  Carnegie Clean

Poor diversification

The 3 months correlation between SHELF and Carnegie is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SHELF DRILLING LTD and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy and SHELF DRILLING 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 SHELF DRILLING LTD are associated (or correlated) with Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of SHELF DRILLING i.e., SHELF DRILLING and Carnegie Clean go up and down completely randomly.

Pair Corralation between SHELF DRILLING and Carnegie Clean

Assuming the 90 days horizon SHELF DRILLING is expected to generate 1.33 times less return on investment than Carnegie Clean. But when comparing it to its historical volatility, SHELF DRILLING LTD is 1.07 times less risky than Carnegie Clean. It trades about 0.13 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Carnegie Clean Energy on April 23, 2025 and sell it today you would earn a total of  0.92  from holding Carnegie Clean Energy or generate 51.11% return on investment over 90 days.

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

SHELF DRILLING LTD  vs.  Carnegie Clean Energy

SHELF DRILLING LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SHELF DRILLING LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SHELF DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

Carnegie Clean Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carnegie Clean Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Carnegie Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHELF DRILLING and Carnegie Clean

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

The idea behind SHELF DRILLING LTD and Carnegie Clean 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.