Correlation Between Energy Absolute and Nex Point
Can any of the company-specific risk be diversified away by investing in both Energy Absolute and Nex Point 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 Energy Absolute and Nex Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Absolute Public and Nex Point Public, you can compare the effects of market volatilities on Energy Absolute and Nex Point 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 Energy Absolute with a short position of Nex Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Absolute and Nex Point.
Diversification Opportunities for Energy Absolute and Nex Point
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Energy and Nex is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and Nex Point Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nex Point Public and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with Nex Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nex Point Public has no effect on the direction of Energy Absolute i.e., Energy Absolute and Nex Point go up and down completely randomly.
Pair Corralation between Energy Absolute and Nex Point
Assuming the 90 days horizon Energy Absolute Public is expected to under-perform the Nex Point. But the stock apears to be less risky and, when comparing its historical volatility, Energy Absolute Public is 9.88 times less risky than Nex Point. The stock trades about -0.1 of its potential returns per unit of risk. The Nex Point Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,370 in Nex Point Public on August 25, 2024 and sell it today you would lose (1,296) from holding Nex Point Public or give up 94.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Energy Absolute Public vs. Nex Point Public
Performance |
| Timeline |
| Energy Absolute Public |
| Nex Point Public |
Energy Absolute and Nex Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Absolute and Nex Point
The main advantage of trading using opposite Energy Absolute and Nex Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Absolute position performs unexpectedly, Nex Point 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 Nex Point will offset losses from the drop in Nex Point's long position.| Energy Absolute vs. PTT Oil and | Energy Absolute vs. Power Solution Technologies | Energy Absolute vs. Star Petroleum Refining | Energy Absolute vs. Prima Marine Public |
| Nex Point vs. Jay Mart Public | Nex Point vs. KCE Electronics Public | Nex Point vs. Hana Microelectronics Public | Nex Point vs. Energy Absolute Public |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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