Correlation Between Ellwee AB and Clean Motion

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

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

Diversification Opportunities for Ellwee AB and Clean Motion

0.85

Correlation Coefficient

Ellwee AB  Clean Motion

Very poor diversification

The 3 months correlation between Ellwee and Clean is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ellwee AB and Clean Motion AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Motion AB and Ellwee AB 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 Ellwee AB are associated (or correlated) with Clean Motion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Motion AB has no effect on the direction of Ellwee AB i.e., Ellwee AB and Clean Motion go up and down completely randomly.

Pair Corralation between Ellwee AB and Clean Motion

Assuming the 90 days trading horizon Ellwee AB is expected to generate 1.3 times less return on investment than Clean Motion. But when comparing it to its historical volatility, Ellwee AB is 1.32 times less risky than Clean Motion. It trades about 0.16 of its potential returns per unit of risk. Clean Motion AB is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Clean Motion AB on April 22, 2025 and sell it today you would earn a total of  21.00  from holding Clean Motion AB or generate 72.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Ellwee AB  vs.  Clean Motion AB

Ellwee AB

Risk-Adjusted Performance

Good

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

Clean Motion AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clean Motion AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Clean Motion unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ellwee AB and Clean Motion

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

The idea behind Ellwee AB and Clean Motion AB 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.