Correlation Between Horizon Oil and Freehold Royalties
Can any of the company-specific risk be diversified away by investing in both Horizon Oil and Freehold Royalties 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 Horizon Oil and Freehold Royalties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Oil Limited and Freehold Royalties, you can compare the effects of market volatilities on Horizon Oil and Freehold Royalties 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 Horizon Oil with a short position of Freehold Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Oil and Freehold Royalties.
Diversification Opportunities for Horizon Oil and Freehold Royalties
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Horizon and Freehold is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Oil Limited and Freehold Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freehold Royalties and Horizon Oil 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 Horizon Oil Limited are associated (or correlated) with Freehold Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freehold Royalties has no effect on the direction of Horizon Oil i.e., Horizon Oil and Freehold Royalties go up and down completely randomly.
Pair Corralation between Horizon Oil and Freehold Royalties
Assuming the 90 days horizon Horizon Oil Limited is expected to generate 9.35 times more return on investment than Freehold Royalties. However, Horizon Oil is 9.35 times more volatile than Freehold Royalties. It trades about 0.08 of its potential returns per unit of risk. Freehold Royalties is currently generating about 0.01 per unit of risk. If you would invest 8.00 in Horizon Oil Limited on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Horizon Oil Limited or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.75% |
| Values | Daily Returns |
Horizon Oil Limited vs. Freehold Royalties
Performance |
| Timeline |
| Horizon Oil Limited |
| Freehold Royalties |
Horizon Oil and Freehold Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Oil and Freehold Royalties
The main advantage of trading using opposite Horizon Oil and Freehold Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Oil position performs unexpectedly, Freehold Royalties 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 Freehold Royalties will offset losses from the drop in Freehold Royalties' long position.| Horizon Oil vs. Dno ASA | Horizon Oil vs. PetroShale | Horizon Oil vs. Enwell Energy plc | Horizon Oil vs. Tullow Oil plc |
| Freehold Royalties vs. Yamaha Motor Co | Freehold Royalties vs. Nitto Denko Corp | Freehold Royalties vs. Farmers Merchants Bancorp | Freehold Royalties vs. Furukawa Electric Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |