Correlation Between Hemisphere Energy and New Stratus
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy and New Stratus 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 Hemisphere Energy and New Stratus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy and New Stratus Energy, you can compare the effects of market volatilities on Hemisphere Energy and New Stratus 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 Hemisphere Energy with a short position of New Stratus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and New Stratus.
Diversification Opportunities for Hemisphere Energy and New Stratus
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hemisphere and New is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy and New Stratus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Stratus Energy and Hemisphere 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 Hemisphere Energy are associated (or correlated) with New Stratus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Stratus Energy has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and New Stratus go up and down completely randomly.
Pair Corralation between Hemisphere Energy and New Stratus
Assuming the 90 days horizon Hemisphere Energy is expected to under-perform the New Stratus. But the stock apears to be less risky and, when comparing its historical volatility, Hemisphere Energy is 3.6 times less risky than New Stratus. The stock trades about -0.01 of its potential returns per unit of risk. The New Stratus Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 42.00 in New Stratus Energy on August 29, 2024 and sell it today you would earn a total of 26.00 from holding New Stratus Energy or generate 61.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hemisphere Energy vs. New Stratus Energy
Performance |
| Timeline |
| Hemisphere Energy |
| New Stratus Energy |
Hemisphere Energy and New Stratus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hemisphere Energy and New Stratus
The main advantage of trading using opposite Hemisphere Energy and New Stratus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy position performs unexpectedly, New Stratus 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 Stratus will offset losses from the drop in New Stratus' long position.| Hemisphere Energy vs. Canadian Natural Resources | Hemisphere Energy vs. Suncor Energy | Hemisphere Energy vs. iShares Canadian HYBrid | Hemisphere Energy vs. Altagas Cum Red |
| New Stratus vs. Arrow Exploration Corp | New Stratus vs. Southern Energy Corp | New Stratus vs. TAG Oil | New Stratus vs. Hemisphere 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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