Correlation Between High Arctic and CES Energy
Can any of the company-specific risk be diversified away by investing in both High Arctic and CES 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 High Arctic and CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Arctic Energy and CES Energy Solutions, you can compare the effects of market volatilities on High Arctic and CES 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 High Arctic with a short position of CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Arctic and CES Energy.
Diversification Opportunities for High Arctic and CES Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between High and CES is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding High Arctic Energy and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions and High Arctic 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 High Arctic Energy are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of High Arctic i.e., High Arctic and CES Energy go up and down completely randomly.
Pair Corralation between High Arctic and CES Energy
Assuming the 90 days horizon High Arctic Energy is expected to generate 14.34 times more return on investment than CES Energy. However, High Arctic is 14.34 times more volatile than CES Energy Solutions. It trades about 0.09 of its potential returns per unit of risk. CES Energy Solutions is currently generating about 0.11 per unit of risk. If you would invest 283.00 in High Arctic Energy on September 3, 2024 and sell it today you would lose (202.00) from holding High Arctic Energy or give up 71.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.4% |
| Values | Daily Returns |
High Arctic Energy vs. CES Energy Solutions
Performance |
| Timeline |
| High Arctic Energy |
| CES Energy Solutions |
High Arctic and CES Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Arctic and CES Energy
The main advantage of trading using opposite High Arctic and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Arctic position performs unexpectedly, CES 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 CES Energy will offset losses from the drop in CES Energy's long position.| High Arctic vs. Seadrill Limited | High Arctic vs. Noble plc | High Arctic vs. Borr Drilling | High Arctic vs. SCOR PK |
| CES Energy vs. Tamarack Valley Energy | CES Energy vs. Secure Energy Services | CES Energy vs. Caixabank SA ADR | CES Energy vs. High Arctic 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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