Correlation Between Brooge Energy and Brooge Holdings
Can any of the company-specific risk be diversified away by investing in both Brooge Energy and Brooge Holdings 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 Brooge Energy and Brooge Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brooge Energy Limited and Brooge Holdings, you can compare the effects of market volatilities on Brooge Energy and Brooge Holdings 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 Brooge Energy with a short position of Brooge Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brooge Energy and Brooge Holdings.
Diversification Opportunities for Brooge Energy and Brooge Holdings
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brooge and Brooge is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Energy Limited and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Holdings and Brooge 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 Brooge Energy Limited are associated (or correlated) with Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Brooge Energy i.e., Brooge Energy and Brooge Holdings go up and down completely randomly.
Pair Corralation between Brooge Energy and Brooge Holdings
Assuming the 90 days horizon Brooge Energy Limited is expected to generate 6.72 times more return on investment than Brooge Holdings. However, Brooge Energy is 6.72 times more volatile than Brooge Holdings. It trades about 0.17 of its potential returns per unit of risk. Brooge Holdings is currently generating about -0.12 per unit of risk. If you would invest 0.14 in Brooge Energy Limited on August 30, 2024 and sell it today you would lose (0.03) from holding Brooge Energy Limited or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
Brooge Energy Limited vs. Brooge Holdings
Performance |
| Timeline |
| Brooge Energy Limited |
| Brooge Holdings |
Brooge Energy and Brooge Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brooge Energy and Brooge Holdings
The main advantage of trading using opposite Brooge Energy and Brooge Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brooge Energy position performs unexpectedly, Brooge Holdings 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 Brooge Holdings will offset losses from the drop in Brooge Holdings' long position.The idea behind Brooge Energy Limited and Brooge Holdings 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.| Brooge Holdings vs. Teekay | Brooge Holdings vs. Targa Resources | Brooge Holdings vs. Teekay Tankers | Brooge Holdings vs. Dynagas LNG Partners |
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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