Correlation Between A-Cap Energy and IGO
Can any of the company-specific risk be diversified away by investing in both A-Cap Energy and IGO 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 A-Cap Energy and IGO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between A Cap Energy Limited and IGO Limited, you can compare the effects of market volatilities on A-Cap Energy and IGO 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 A-Cap Energy with a short position of IGO. Check out your portfolio center. Please also check ongoing floating volatility patterns of A-Cap Energy and IGO.
Diversification Opportunities for A-Cap Energy and IGO
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between A-Cap and IGO is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited and IGO Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGO Limited and A-Cap 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 A Cap Energy Limited are associated (or correlated) with IGO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGO Limited has no effect on the direction of A-Cap Energy i.e., A-Cap Energy and IGO go up and down completely randomly.
Pair Corralation between A-Cap Energy and IGO
Assuming the 90 days horizon A Cap Energy Limited is expected to generate 2.79 times more return on investment than IGO. However, A-Cap Energy is 2.79 times more volatile than IGO Limited. It trades about 0.05 of its potential returns per unit of risk. IGO Limited is currently generating about 0.01 per unit of risk. If you would invest 6.00 in A Cap Energy Limited on September 3, 2024 and sell it today you would lose (3.40) from holding A Cap Energy Limited or give up 56.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 29.86% |
| Values | Daily Returns |
A Cap Energy Limited vs. IGO Limited
Performance |
| Timeline |
| A Cap Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| IGO Limited |
A-Cap Energy and IGO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with A-Cap Energy and IGO
The main advantage of trading using opposite A-Cap Energy and IGO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A-Cap Energy position performs unexpectedly, IGO 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 IGO will offset losses from the drop in IGO's long position.| A-Cap Energy vs. Champion Bear Resources | A-Cap Energy vs. Aurelia Metals Limited | A-Cap Energy vs. Baroyeca Gold Silver | A-Cap Energy vs. Centaurus Metals Limited |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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