Correlation Between Geo Energy and New HopeLtd
Can any of the company-specific risk be diversified away by investing in both Geo Energy and New HopeLtd 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 Geo Energy and New HopeLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geo Energy Resources and New Hope, you can compare the effects of market volatilities on Geo Energy and New HopeLtd 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 Geo Energy with a short position of New HopeLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo Energy and New HopeLtd.
Diversification Opportunities for Geo Energy and New HopeLtd
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Geo and New is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLtd and Geo 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 Geo Energy Resources are associated (or correlated) with New HopeLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLtd has no effect on the direction of Geo Energy i.e., Geo Energy and New HopeLtd go up and down completely randomly.
Pair Corralation between Geo Energy and New HopeLtd
Assuming the 90 days horizon Geo Energy Resources is expected to under-perform the New HopeLtd. But the pink sheet apears to be less risky and, when comparing its historical volatility, Geo Energy Resources is 2.62 times less risky than New HopeLtd. The pink sheet trades about -0.02 of its potential returns per unit of risk. The New Hope is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 292.00 in New Hope on September 2, 2024 and sell it today you would earn a total of 20.00 from holding New Hope or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Geo Energy Resources vs. New Hope
Performance |
| Timeline |
| Geo Energy Resources |
| New HopeLtd |
Geo Energy and New HopeLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geo Energy and New HopeLtd
The main advantage of trading using opposite Geo Energy and New HopeLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo Energy position performs unexpectedly, New HopeLtd 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 New HopeLtd will offset losses from the drop in New HopeLtd's long position.| Geo Energy vs. Yanzhou Coal Mining | Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Bukit Asam Tbk | Geo Energy vs. Thungela Resources Limited |
| New HopeLtd vs. Whitehaven Coal Limited | New HopeLtd vs. Adaro Energy Tbk | New HopeLtd vs. Thungela Resources Limited | New HopeLtd vs. Yanzhou Coal Mining |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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