Correlation Between Bengal Energy and Petrus Resources
Can any of the company-specific risk be diversified away by investing in both Bengal Energy and Petrus 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 Bengal Energy and Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bengal Energy and Petrus Resources, you can compare the effects of market volatilities on Bengal Energy and Petrus 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 Bengal Energy with a short position of Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bengal Energy and Petrus Resources.
Diversification Opportunities for Bengal Energy and Petrus Resources
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bengal and Petrus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bengal Energy and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources and Bengal 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 Bengal Energy are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Bengal Energy i.e., Bengal Energy and Petrus Resources go up and down completely randomly.
Pair Corralation between Bengal Energy and Petrus Resources
Assuming the 90 days horizon Bengal Energy is expected to generate 5.16 times more return on investment than Petrus Resources. However, Bengal Energy is 5.16 times more volatile than Petrus Resources. It trades about -0.03 of its potential returns per unit of risk. Petrus Resources is currently generating about -0.22 per unit of risk. If you would invest 0.80 in Bengal Energy on November 3, 2024 and sell it today you would lose (0.11) from holding Bengal Energy or give up 13.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bengal Energy vs. Petrus Resources
Performance |
| Timeline |
| Bengal Energy |
| Petrus Resources |
Bengal Energy and Petrus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bengal Energy and Petrus Resources
The main advantage of trading using opposite Bengal Energy and Petrus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bengal Energy position performs unexpectedly, Petrus 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 Petrus Resources will offset losses from the drop in Petrus Resources' long position.| Bengal Energy vs. Agnico Eagle Mines | Bengal Energy vs. Osisko Gold Ro | Bengal Energy vs. Gold Fields Ltd | Bengal Energy vs. AngloGold Ashanti plc |
| Petrus Resources vs. FAR Limited | Petrus Resources vs. Valeura Energy | Petrus Resources vs. Epsilon Energy | Petrus Resources vs. PetroShale |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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