Correlation Between PEDEVCO Corp and Canacol Energy

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Can any of the company-specific risk be diversified away by investing in both PEDEVCO Corp and Canacol 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 PEDEVCO Corp and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEDEVCO Corp and Canacol Energy, you can compare the effects of market volatilities on PEDEVCO Corp and Canacol 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 PEDEVCO Corp with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEDEVCO Corp and Canacol Energy.

Diversification Opportunities for PEDEVCO Corp and Canacol Energy

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between PEDEVCO and Canacol is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PEDEVCO Corp and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and PEDEVCO Corp 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 PEDEVCO Corp are associated (or correlated) with Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of PEDEVCO Corp i.e., PEDEVCO Corp and Canacol Energy go up and down completely randomly.

Pair Corralation between PEDEVCO Corp and Canacol Energy

Considering the 90-day investment horizon PEDEVCO Corp is expected to generate 1.02 times more return on investment than Canacol Energy. However, PEDEVCO Corp is 1.02 times more volatile than Canacol Energy. It trades about 0.01 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.03 per unit of risk. If you would invest  88.00  in PEDEVCO Corp on September 3, 2024 and sell it today you would lose (3.00) from holding PEDEVCO Corp or give up 3.41% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

PEDEVCO Corp  vs.  Canacol Energy

 Performance 
       Timeline  
PEDEVCO Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in PEDEVCO Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PEDEVCO Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Canacol Energy 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Canacol Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Canacol Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PEDEVCO Corp and Canacol Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PEDEVCO Corp and Canacol Energy

The main advantage of trading using opposite PEDEVCO Corp and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEDEVCO Corp position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.
The idea behind PEDEVCO Corp and Canacol Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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