Correlation Between Frontera Energy and ERHC Energy
Can any of the company-specific risk be diversified away by investing in both Frontera Energy and ERHC 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 Frontera Energy and ERHC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontera Energy Corp and ERHC Energy, you can compare the effects of market volatilities on Frontera Energy and ERHC 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 Frontera Energy with a short position of ERHC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontera Energy and ERHC Energy.
Diversification Opportunities for Frontera Energy and ERHC Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Frontera and ERHC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and ERHC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ERHC Energy and Frontera 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 Frontera Energy Corp are associated (or correlated) with ERHC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ERHC Energy has no effect on the direction of Frontera Energy i.e., Frontera Energy and ERHC Energy go up and down completely randomly.
Pair Corralation between Frontera Energy and ERHC Energy
Assuming the 90 days horizon Frontera Energy Corp is expected to under-perform the ERHC Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Frontera Energy Corp is 46.3 times less risky than ERHC Energy. The pink sheet trades about -0.01 of its potential returns per unit of risk. The ERHC Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.01 in ERHC Energy on August 30, 2024 and sell it today you would earn a total of 0.20 from holding ERHC Energy or generate 2000.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontera Energy Corp vs. ERHC Energy
Performance |
| Timeline |
| Frontera Energy Corp |
| ERHC Energy |
Frontera Energy and ERHC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontera Energy and ERHC Energy
The main advantage of trading using opposite Frontera Energy and ERHC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontera Energy position performs unexpectedly, ERHC 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 ERHC Energy will offset losses from the drop in ERHC Energy's long position.| Frontera Energy vs. CGX Energy | Frontera Energy vs. Athabasca Oil Corp | Frontera Energy vs. Africa Oil Corp | Frontera Energy vs. MEG Energy Corp |
| ERHC Energy vs. Frontera Energy Corp | ERHC Energy vs. Coterra Energy | ERHC Energy vs. Eco Oil Gas | ERHC Energy vs. PetroTal 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |