Correlation Between Geo Energy and TerraCom
Can any of the company-specific risk be diversified away by investing in both Geo Energy and TerraCom 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 TerraCom 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 TerraCom Limited, you can compare the effects of market volatilities on Geo Energy and TerraCom 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 TerraCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geo Energy and TerraCom.
Diversification Opportunities for Geo Energy and TerraCom
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Geo and TerraCom is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources and TerraCom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TerraCom Limited 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 TerraCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TerraCom Limited has no effect on the direction of Geo Energy i.e., Geo Energy and TerraCom go up and down completely randomly.
Pair Corralation between Geo Energy and TerraCom
Assuming the 90 days horizon Geo Energy Resources is expected to under-perform the TerraCom. But the pink sheet apears to be less risky and, when comparing its historical volatility, Geo Energy Resources is 1.28 times less risky than TerraCom. The pink sheet trades about -0.22 of its potential returns per unit of risk. The TerraCom Limited is currently generating about 0.87 of returns per unit of risk over similar time horizon. If you would invest 14.00 in TerraCom Limited on August 28, 2024 and sell it today you would earn a total of 2.00 from holding TerraCom Limited or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 19.05% |
| Values | Daily Returns |
Geo Energy Resources vs. TerraCom Limited
Performance |
| Timeline |
| Geo Energy Resources |
| TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Geo Energy and TerraCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geo Energy and TerraCom
The main advantage of trading using opposite Geo Energy and TerraCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geo Energy position performs unexpectedly, TerraCom 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 TerraCom will offset losses from the drop in TerraCom's long position.| Geo Energy vs. Alliance Resource Partners | Geo Energy vs. Astera Labs, Common | Geo Energy vs. Autodesk | Geo Energy vs. Applied Blockchain |
| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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