Correlation Between ACT Energy and CES Energy

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

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

Diversification Opportunities for ACT Energy and CES Energy

-0.45

Correlation Coefficient

ACT Energy  CES Energy

Very good diversification

The 3 months correlation between ACT and CES is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ACT Energy Technologies and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and ACT Energy 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 ACT Energy Technologies are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of ACT Energy i.e., ACT Energy and CES Energy go up and down completely randomly.

Pair Corralation between ACT Energy and CES Energy

Assuming the 90 days trading horizon ACT Energy Technologies is expected to under-perform the CES Energy. But the stock apears to be less risky and, when comparing its historical volatility, ACT Energy Technologies is 1.15 times less risky than CES Energy. The stock trades about -0.1 of its potential returns per unit of risk. The CES Energy Solutions is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  609.00  in CES Energy Solutions on April 22, 2025 and sell it today you would earn a total of  133.00  from holding CES Energy Solutions or generate 21.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

ACT Energy Technologies  vs.  CES Energy Solutions

ACT Energy Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACT Energy Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CES Energy Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CES Energy Solutions are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, CES Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACT Energy and CES Energy

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

The idea behind ACT Energy Technologies and CES Energy Solutions 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.

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 the Volatility Analysis module to get historical volatility and risk analysis based on latest market data.