Correlation Between Prospera Energy and Bengal Energy
Can any of the company-specific risk be diversified away by investing in both Prospera Energy and Bengal 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 Prospera Energy and Bengal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospera Energy and Bengal Energy, you can compare the effects of market volatilities on Prospera Energy and Bengal 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 Prospera Energy with a short position of Bengal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospera Energy and Bengal Energy.
Diversification Opportunities for Prospera Energy and Bengal Energy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prospera and Bengal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Prospera Energy and Bengal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bengal Energy and Prospera 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 Prospera Energy are associated (or correlated) with Bengal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bengal Energy has no effect on the direction of Prospera Energy i.e., Prospera Energy and Bengal Energy go up and down completely randomly.
Pair Corralation between Prospera Energy and Bengal Energy
Assuming the 90 days horizon Prospera Energy is expected to under-perform the Bengal Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prospera Energy is 4.02 times less risky than Bengal Energy. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Bengal Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Bengal Energy on August 28, 2024 and sell it today you would earn a total of 0.05 from holding Bengal Energy or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospera Energy vs. Bengal Energy
Performance |
| Timeline |
| Prospera Energy |
| Bengal Energy |
Prospera Energy and Bengal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospera Energy and Bengal Energy
The main advantage of trading using opposite Prospera Energy and Bengal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospera Energy position performs unexpectedly, Bengal 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 Bengal Energy will offset losses from the drop in Bengal Energy's long position.| Prospera Energy vs. Petroleo Brasileiro Petrobras | Prospera Energy vs. Equinor ASA ADR | Prospera Energy vs. Eni SpA ADR | Prospera Energy vs. YPF Sociedad Anonima |
| Bengal Energy vs. Petroleo Brasileiro Petrobras | Bengal Energy vs. Equinor ASA ADR | Bengal Energy vs. Eni SpA ADR | Bengal Energy vs. YPF Sociedad Anonima |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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