Correlation Between Bri Chem and CES Energy
Can any of the company-specific risk be diversified away by investing in both Bri Chem and CES 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 Bri Chem and CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bri Chem Corp and CES Energy Solutions, you can compare the effects of market volatilities on Bri Chem and CES 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 Bri Chem with a short position of CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bri Chem and CES Energy.
Diversification Opportunities for Bri Chem and CES Energy
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bri and CES is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bri Chem Corp and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and Bri Chem 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 Bri Chem Corp are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Bri Chem i.e., Bri Chem and CES Energy go up and down completely randomly.
Pair Corralation between Bri Chem and CES Energy
Assuming the 90 days trading horizon Bri Chem Corp is expected to under-perform the CES Energy. In addition to that, Bri Chem is 1.88 times more volatile than CES Energy Solutions. It trades about -0.02 of its total potential returns per unit of risk. CES Energy Solutions is currently generating about 0.12 per unit of volatility. If you would invest 255.00 in CES Energy Solutions on August 30, 2024 and sell it today you would earn a total of 694.00 from holding CES Energy Solutions or generate 272.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bri Chem Corp vs. CES Energy Solutions
Performance |
| Timeline |
| Bri Chem Corp |
| CES Energy Solutions |
Bri Chem and CES Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bri Chem and CES Energy
The main advantage of trading using opposite Bri Chem and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bri Chem position performs unexpectedly, CES 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 CES Energy will offset losses from the drop in CES Energy's long position.| Bri Chem vs. Canadian Natural Resources | Bri Chem vs. Suncor Energy | Bri Chem vs. iShares Canadian HYBrid | Bri Chem vs. Altagas Cum Red |
| CES Energy vs. Secure Energy Services | CES Energy vs. Ensign Energy Services | CES Energy vs. Kelt Exploration | CES Energy vs. Trican Well Service |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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