Correlation Between CES Energy and Bri Chem
Can any of the company-specific risk be diversified away by investing in both CES Energy and Bri Chem 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 CES Energy and Bri Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CES Energy Solutions and Bri Chem Corp, you can compare the effects of market volatilities on CES Energy and Bri Chem 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 CES Energy with a short position of Bri Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Bri Chem.
Diversification Opportunities for CES Energy and Bri Chem
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CES and Bri is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Bri Chem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bri Chem Corp and CES 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 CES Energy Solutions are associated (or correlated) with Bri Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bri Chem Corp has no effect on the direction of CES Energy i.e., CES Energy and Bri Chem go up and down completely randomly.
Pair Corralation between CES Energy and Bri Chem
Assuming the 90 days trading horizon CES Energy Solutions is expected to generate 0.53 times more return on investment than Bri Chem. However, CES Energy Solutions is 1.88 times less risky than Bri Chem. It trades about 0.12 of its potential returns per unit of risk. Bri Chem Corp is currently generating about -0.02 per unit of risk. 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 |
CES Energy Solutions vs. Bri Chem Corp
Performance |
| Timeline |
| CES Energy Solutions |
| Bri Chem Corp |
CES Energy and Bri Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Bri Chem
The main advantage of trading using opposite CES Energy and Bri Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Bri Chem 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 Bri Chem will offset losses from the drop in Bri Chem's long position.| CES Energy vs. Secure Energy Services | CES Energy vs. Ensign Energy Services | CES Energy vs. Kelt Exploration | CES Energy vs. Trican Well Service |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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