Correlation Between CO2 Energy and FACT II

Can any of the company-specific risk be diversified away by investing in both CO2 Energy and FACT II 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 CO2 Energy and FACT II into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Energy Transition and FACT II Acquisition, you can compare the effects of market volatilities on CO2 Energy and FACT II 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 CO2 Energy with a short position of FACT II. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Energy and FACT II.

Diversification Opportunities for CO2 Energy and FACT II

-0.02

Correlation Coefficient

CO2 Energy  FACT II

Good diversification

The 3 months correlation between CO2 and FACT is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Energy Transition and FACT II Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FACT II Acquisition and CO2 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 CO2 Energy Transition are associated (or correlated) with FACT II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FACT II Acquisition has no effect on the direction of CO2 Energy i.e., CO2 Energy and FACT II go up and down completely randomly.

Pair Corralation between CO2 Energy and FACT II

Assuming the 90 days horizon CO2 Energy Transition is expected to generate 44.82 times more return on investment than FACT II. However, CO2 Energy is 44.82 times more volatile than FACT II Acquisition. It trades about 0.08 of its potential returns per unit of risk. FACT II Acquisition is currently generating about 0.13 per unit of risk. If you would invest  18.00  in CO2 Energy Transition on May 5, 2025 and sell it today you would earn a total of  0.00  from holding CO2 Energy Transition or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.14%
Values	Daily Returns

CO2 Energy Transition  vs.  FACT II Acquisition

CO2 Energy Transition

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CO2 Energy Transition are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, CO2 Energy reported solid returns over the last few months and may actually be approaching a breakup point.

FACT II Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FACT II Acquisition are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, FACT II is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CO2 Energy and FACT II

The main advantage of trading using opposite CO2 Energy and FACT II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Energy position performs unexpectedly, FACT II 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 FACT II will offset losses from the drop in FACT II's long position.

The idea behind CO2 Energy Transition and FACT II Acquisition 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.