Correlation Between APA and Valeura Energy
Can any of the company-specific risk be diversified away by investing in both APA and Valeura 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 APA and Valeura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Valeura Energy, you can compare the effects of market volatilities on APA and Valeura 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 APA with a short position of Valeura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Valeura Energy.
Diversification Opportunities for APA and Valeura Energy
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between APA and Valeura is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and APA 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 APA Corporation are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of APA i.e., APA and Valeura Energy go up and down completely randomly.
Pair Corralation between APA and Valeura Energy
Considering the 90-day investment horizon APA Corporation is expected to under-perform the Valeura Energy. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.59 times less risky than Valeura Energy. The stock trades about -0.05 of its potential returns per unit of risk. The Valeura Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Valeura Energy on September 1, 2024 and sell it today you would earn a total of 105.00 from holding Valeura Energy or generate 32.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APA Corp. vs. Valeura Energy
Performance |
| Timeline |
| APA Corporation |
| Valeura Energy |
APA and Valeura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Valeura Energy
The main advantage of trading using opposite APA and Valeura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Valeura 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 Valeura Energy will offset losses from the drop in Valeura Energy's long position.The idea behind APA Corporation and Valeura Energy 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.| Valeura Energy vs. PepsiCo | Valeura Energy vs. Nascent Wine | Valeura Energy vs. NioCorp Developments Ltd | Valeura Energy vs. Perseus Mining Limited |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets |