Correlation Between Eco (Atlantic) and APA
Can any of the company-specific risk be diversified away by investing in both Eco (Atlantic) and APA 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 Eco (Atlantic) and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eco Oil Gas and APA Corporation, you can compare the effects of market volatilities on Eco (Atlantic) and APA 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 Eco (Atlantic) with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco (Atlantic) and APA.
Diversification Opportunities for Eco (Atlantic) and APA
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eco and APA is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Eco (Atlantic) 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 Eco Oil Gas are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Eco (Atlantic) i.e., Eco (Atlantic) and APA go up and down completely randomly.
Pair Corralation between Eco (Atlantic) and APA
Assuming the 90 days horizon Eco Oil Gas is expected to generate 3.55 times more return on investment than APA. However, Eco (Atlantic) is 3.55 times more volatile than APA Corporation. It trades about 0.02 of its potential returns per unit of risk. APA Corporation is currently generating about -0.04 per unit of risk. If you would invest 24.00 in Eco Oil Gas on August 30, 2024 and sell it today you would lose (12.00) from holding Eco Oil Gas or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eco Oil Gas vs. APA Corp.
Performance |
| Timeline |
| Eco (Atlantic) |
| APA Corporation |
Eco (Atlantic) and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eco (Atlantic) and APA
The main advantage of trading using opposite Eco (Atlantic) and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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