Correlation Between CES Energy and Pason Systems
Can any of the company-specific risk be diversified away by investing in both CES Energy and Pason Systems 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 Pason Systems 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 Pason Systems, you can compare the effects of market volatilities on CES Energy and Pason Systems 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 Pason Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of CES Energy and Pason Systems.
Diversification Opportunities for CES Energy and Pason Systems
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CES and Pason is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CES Energy Solutions and Pason Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pason Systems 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 Pason Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pason Systems has no effect on the direction of CES Energy i.e., CES Energy and Pason Systems go up and down completely randomly.
Pair Corralation between CES Energy and Pason Systems
Assuming the 90 days trading horizon CES Energy Solutions is expected to generate 1.3 times more return on investment than Pason Systems. However, CES Energy is 1.3 times more volatile than Pason Systems. It trades about 0.32 of its potential returns per unit of risk. Pason Systems is currently generating about 0.12 per unit of risk. If you would invest 798.00 in CES Energy Solutions on September 1, 2024 and sell it today you would earn a total of 168.00 from holding CES Energy Solutions or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CES Energy Solutions vs. Pason Systems
Performance |
| Timeline |
| CES Energy Solutions |
| Pason Systems |
CES Energy and Pason Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CES Energy and Pason Systems
The main advantage of trading using opposite CES Energy and Pason Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CES Energy position performs unexpectedly, Pason Systems 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 Pason Systems will offset losses from the drop in Pason Systems' 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 |
| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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