Correlation Between 88 Energy and Step One
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Step One 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 88 Energy and Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Step One Clothing, you can compare the effects of market volatilities on 88 Energy and Step One 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 88 Energy with a short position of Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Step One.
Diversification Opportunities for 88 Energy and Step One
Very weak diversification
The 3 months correlation between 88E and Step is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing and 88 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 88 Energy are associated (or correlated) with Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of 88 Energy i.e., 88 Energy and Step One go up and down completely randomly.
Pair Corralation between 88 Energy and Step One
Assuming the 90 days trading horizon 88 Energy is expected to generate 3.4 times more return on investment than Step One. However, 88 Energy is 3.4 times more volatile than Step One Clothing. It trades about 0.05 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.1 per unit of risk. If you would invest 0.99 in 88 Energy on September 12, 2024 and sell it today you would lose (0.89) from holding 88 Energy or give up 89.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
88 Energy vs. Step One Clothing
Performance |
| Timeline |
| 88 Energy |
| Step One Clothing |
88 Energy and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Step One
The main advantage of trading using opposite 88 Energy and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| 88 Energy vs. Duxton Broadacre Farms | 88 Energy vs. Aeon Metals | 88 Energy vs. DY6 Metals | 88 Energy vs. Group 6 Metals |
| Step One vs. Aneka Tambang Tbk | Step One vs. BHP Group Limited | Step One vs. Commonwealth Bank | Step One vs. Commonwealth Bank of |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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