Correlation Between Gear Energy and Altima Resources
Can any of the company-specific risk be diversified away by investing in both Gear Energy and Altima Resources 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 Gear Energy and Altima Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gear Energy and Altima Resources, you can compare the effects of market volatilities on Gear Energy and Altima Resources 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 Gear Energy with a short position of Altima Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear Energy and Altima Resources.
Diversification Opportunities for Gear Energy and Altima Resources
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gear and Altima is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Altima Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altima Resources and Gear 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 Gear Energy are associated (or correlated) with Altima Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altima Resources has no effect on the direction of Gear Energy i.e., Gear Energy and Altima Resources go up and down completely randomly.
Pair Corralation between Gear Energy and Altima Resources
Assuming the 90 days trading horizon Gear Energy is expected to under-perform the Altima Resources. But the stock apears to be less risky and, when comparing its historical volatility, Gear Energy is 4.32 times less risky than Altima Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Altima Resources is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Altima Resources on September 4, 2024 and sell it today you would earn a total of 3.00 from holding Altima Resources or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Gear Energy vs. Altima Resources
Performance |
| Timeline |
| Gear Energy |
| Altima Resources |
Gear Energy and Altima Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gear Energy and Altima Resources
The main advantage of trading using opposite Gear Energy and Altima Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear Energy position performs unexpectedly, Altima Resources 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 Altima Resources will offset losses from the drop in Altima Resources' long position.| Gear Energy vs. Cardinal Energy | Gear Energy vs. Tamarack Valley Energy | Gear Energy vs. Athabasca Oil Corp | Gear Energy vs. Headwater Exploration |
| Altima Resources vs. Gear Energy | Altima Resources vs. Journey Energy | Altima Resources vs. Yangarra Resources | Altima Resources vs. Pine Cliff 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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