Correlation Between Avanti Energy and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Avanti Energy and CGX 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 Avanti Energy and CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avanti Energy and CGX Energy, you can compare the effects of market volatilities on Avanti Energy and CGX 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 Avanti Energy with a short position of CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avanti Energy and CGX Energy.
Diversification Opportunities for Avanti Energy and CGX Energy
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Avanti and CGX is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Avanti Energy and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and Avanti 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 Avanti Energy are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Avanti Energy i.e., Avanti Energy and CGX Energy go up and down completely randomly.
Pair Corralation between Avanti Energy and CGX Energy
Assuming the 90 days horizon Avanti Energy is expected to under-perform the CGX Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Avanti Energy is 1.18 times less risky than CGX Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The CGX Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 75.00 in CGX Energy on August 30, 2024 and sell it today you would lose (61.00) from holding CGX Energy or give up 81.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avanti Energy vs. CGX Energy
Performance |
| Timeline |
| Avanti Energy |
| CGX Energy |
Avanti Energy and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avanti Energy and CGX Energy
The main advantage of trading using opposite Avanti Energy and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avanti Energy position performs unexpectedly, CGX 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| Avanti Energy vs. Yamaha Motor Co | Avanti Energy vs. Nitto Denko Corp | Avanti Energy vs. Farmers Merchants Bancorp | Avanti Energy vs. Furukawa Electric Co |
| CGX Energy vs. Yamaha Motor Co | CGX Energy vs. Nitto Denko Corp | CGX Energy vs. Farmers Merchants Bancorp | CGX Energy vs. Furukawa Electric Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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