Correlation Between Otto Energy and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Otto Energy and Finexia Financial 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 Otto Energy and Finexia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otto Energy and Finexia Financial Group, you can compare the effects of market volatilities on Otto Energy and Finexia Financial 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 Otto Energy with a short position of Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otto Energy and Finexia Financial.
Diversification Opportunities for Otto Energy and Finexia Financial
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Otto and Finexia is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Otto Energy and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial and Otto 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 Otto Energy are associated (or correlated) with Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Otto Energy i.e., Otto Energy and Finexia Financial go up and down completely randomly.
Pair Corralation between Otto Energy and Finexia Financial
Assuming the 90 days trading horizon Otto Energy is expected to generate 1.61 times less return on investment than Finexia Financial. In addition to that, Otto Energy is 2.63 times more volatile than Finexia Financial Group. It trades about 0.06 of its total potential returns per unit of risk. Finexia Financial Group is currently generating about 0.27 per unit of volatility. If you would invest 26.00 in Finexia Financial Group on August 28, 2024 and sell it today you would earn a total of 5.00 from holding Finexia Financial Group or generate 19.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otto Energy vs. Finexia Financial Group
Performance |
| Timeline |
| Otto Energy |
| Finexia Financial |
Otto Energy and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otto Energy and Finexia Financial
The main advantage of trading using opposite Otto Energy and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otto Energy position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Otto Energy vs. Westpac Banking | Otto Energy vs. ABACUS STORAGE KING | Otto Energy vs. Insurance Australia Group | Otto Energy vs. Origin Energy |
| Finexia Financial vs. Renascor Resources | Finexia Financial vs. Venus Metals | Finexia Financial vs. Havilah Resources | Finexia Financial vs. Asara Resources |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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