Correlation Between Alligator Energy and Bannerman Resources
Can any of the company-specific risk be diversified away by investing in both Alligator Energy and Bannerman Resources 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 Alligator Energy and Bannerman Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alligator Energy Limited and Bannerman Resources, you can compare the effects of market volatilities on Alligator Energy and Bannerman Resources 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 Alligator Energy with a short position of Bannerman Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alligator Energy and Bannerman Resources.
Diversification Opportunities for Alligator Energy and Bannerman Resources
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alligator and Bannerman is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Energy Limited and Bannerman Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannerman Resources and Alligator 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 Alligator Energy Limited are associated (or correlated) with Bannerman Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannerman Resources has no effect on the direction of Alligator Energy i.e., Alligator Energy and Bannerman Resources go up and down completely randomly.
Pair Corralation between Alligator Energy and Bannerman Resources
Assuming the 90 days horizon Alligator Energy Limited is expected to generate 1.78 times more return on investment than Bannerman Resources. However, Alligator Energy is 1.78 times more volatile than Bannerman Resources. It trades about -0.1 of its potential returns per unit of risk. Bannerman Resources is currently generating about -0.24 per unit of risk. If you would invest 2.87 in Alligator Energy Limited on August 29, 2024 and sell it today you would lose (0.37) from holding Alligator Energy Limited or give up 12.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alligator Energy Limited vs. Bannerman Resources
Performance |
| Timeline |
| Alligator Energy |
| Bannerman Resources |
Alligator Energy and Bannerman Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alligator Energy and Bannerman Resources
The main advantage of trading using opposite Alligator Energy and Bannerman Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alligator Energy position performs unexpectedly, Bannerman Resources 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 Bannerman Resources will offset losses from the drop in Bannerman Resources' long position.The idea behind Alligator Energy Limited and Bannerman Resources 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.| Bannerman Resources vs. Isoenergy | Bannerman Resources vs. Paladin Energy | Bannerman Resources vs. F3 Uranium Corp | Bannerman Resources vs. enCore Energy Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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