Correlation Between Alliance Resource and Geo Energy
Can any of the company-specific risk be diversified away by investing in both Alliance Resource and Geo 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 Alliance Resource and Geo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Resource Partners and Geo Energy Resources, you can compare the effects of market volatilities on Alliance Resource and Geo 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 Alliance Resource with a short position of Geo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Resource and Geo Energy.
Diversification Opportunities for Alliance Resource and Geo Energy
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alliance and Geo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and Geo Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Energy Resources and Alliance Resource 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 Alliance Resource Partners are associated (or correlated) with Geo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Energy Resources has no effect on the direction of Alliance Resource i.e., Alliance Resource and Geo Energy go up and down completely randomly.
Pair Corralation between Alliance Resource and Geo Energy
Given the investment horizon of 90 days Alliance Resource Partners is expected to generate 0.6 times more return on investment than Geo Energy. However, Alliance Resource Partners is 1.66 times less risky than Geo Energy. It trades about 0.29 of its potential returns per unit of risk. Geo Energy Resources is currently generating about -0.21 per unit of risk. If you would invest 2,496 in Alliance Resource Partners on August 30, 2024 and sell it today you would earn a total of 300.00 from holding Alliance Resource Partners or generate 12.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Resource Partners vs. Geo Energy Resources
Performance |
| Timeline |
| Alliance Resource |
| Geo Energy Resources |
Alliance Resource and Geo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Resource and Geo Energy
The main advantage of trading using opposite Alliance Resource and Geo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Resource position performs unexpectedly, Geo 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 Geo Energy will offset losses from the drop in Geo Energy's long position.| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
| Geo Energy vs. Yanzhou Coal Mining | Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Bukit Asam Tbk | Geo Energy vs. Thungela Resources 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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