Correlation Between Odyssey Energy and Peninsula Energy
Can any of the company-specific risk be diversified away by investing in both Odyssey Energy and Peninsula 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 Odyssey Energy and Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odyssey Energy and Peninsula Energy, you can compare the effects of market volatilities on Odyssey Energy and Peninsula 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 Odyssey Energy with a short position of Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odyssey Energy and Peninsula Energy.
Diversification Opportunities for Odyssey Energy and Peninsula Energy
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Odyssey and Peninsula is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Energy and Peninsula Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy and Odyssey 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 Odyssey Energy are associated (or correlated) with Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of Odyssey Energy i.e., Odyssey Energy and Peninsula Energy go up and down completely randomly.
Pair Corralation between Odyssey Energy and Peninsula Energy
Assuming the 90 days trading horizon Odyssey Energy is expected to generate 0.75 times more return on investment than Peninsula Energy. However, Odyssey Energy is 1.34 times less risky than Peninsula Energy. It trades about -0.07 of its potential returns per unit of risk. Peninsula Energy is currently generating about -0.36 per unit of risk. If you would invest 2.20 in Odyssey Energy on August 28, 2024 and sell it today you would lose (0.20) from holding Odyssey Energy or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odyssey Energy vs. Peninsula Energy
Performance |
| Timeline |
| Odyssey Energy |
| Peninsula Energy |
Odyssey Energy and Peninsula Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odyssey Energy and Peninsula Energy
The main advantage of trading using opposite Odyssey Energy and Peninsula Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odyssey Energy position performs unexpectedly, Peninsula 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 Peninsula Energy will offset losses from the drop in Peninsula Energy's long position.| Odyssey Energy vs. Westpac Banking | Odyssey Energy vs. ABACUS STORAGE KING | Odyssey Energy vs. People Infrastructure | Odyssey Energy vs. Insurance Australia Group |
| Peninsula Energy vs. Westpac Banking | Peninsula Energy vs. ABACUS STORAGE KING | Peninsula Energy vs. Odyssey Energy | Peninsula Energy vs. Insurance Australia Group |
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 CEOs Directory module to screen CEOs from public companies around the world.
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