Correlation Between Hemisphere Energy and TAG Oil
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy and TAG Oil 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 TAG Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy and TAG Oil, you can compare the effects of market volatilities on Hemisphere Energy and TAG Oil 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 TAG Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and TAG Oil.
Diversification Opportunities for Hemisphere Energy and TAG Oil
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hemisphere and TAG is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy and TAG Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAG Oil 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 TAG Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAG Oil has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and TAG Oil go up and down completely randomly.
Pair Corralation between Hemisphere Energy and TAG Oil
Assuming the 90 days horizon Hemisphere Energy is expected to generate 136.31 times less return on investment than TAG Oil. But when comparing it to its historical volatility, Hemisphere Energy is 3.96 times less risky than TAG Oil. It trades about 0.01 of its potential returns per unit of risk. TAG Oil is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 14.00 in TAG Oil on October 21, 2024 and sell it today you would earn a total of 3.00 from holding TAG Oil or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hemisphere Energy vs. TAG Oil
Performance |
| Timeline |
| Hemisphere Energy |
| TAG Oil |
Hemisphere Energy and TAG Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hemisphere Energy and TAG Oil
The main advantage of trading using opposite Hemisphere Energy and TAG Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy position performs unexpectedly, TAG Oil 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 TAG Oil will offset losses from the drop in TAG Oil's long position.| Hemisphere Energy vs. InPlay Oil Corp | Hemisphere Energy vs. Pine Cliff Energy | Hemisphere Energy vs. Journey Energy | Hemisphere Energy vs. Yangarra Resources |
| TAG Oil vs. Southern Energy Corp | TAG Oil vs. ShaMaran Petroleum Corp | TAG Oil vs. Tenaz Energy Corp | TAG Oil 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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