Correlation Between PetroShale and CGX Energy
Can any of the company-specific risk be diversified away by investing in both PetroShale and CGX 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 PetroShale and CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and CGX Energy, you can compare the effects of market volatilities on PetroShale and CGX 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 PetroShale with a short position of CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and CGX Energy.
Diversification Opportunities for PetroShale and CGX Energy
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between PetroShale and CGX is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and PetroShale 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 PetroShale are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of PetroShale i.e., PetroShale and CGX Energy go up and down completely randomly.
Pair Corralation between PetroShale and CGX Energy
Assuming the 90 days horizon PetroShale is expected to under-perform the CGX Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 3.17 times less risky than CGX Energy. The otc stock trades about -0.46 of its potential returns per unit of risk. The CGX Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9.24 in CGX Energy on December 24, 2024 and sell it today you would lose (0.63) from holding CGX Energy or give up 6.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 54.55% |
| Values | Daily Returns |
PetroShale vs. CGX Energy
Performance |
| Timeline |
| PetroShale |
| CGX Energy |
PetroShale and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and CGX Energy
The main advantage of trading using opposite PetroShale and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, CGX 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 CGX Energy will offset losses from the drop in CGX Energy's long position.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| CGX Energy vs. Avanti Energy | CGX Energy vs. Desert Mountain Energy | CGX Energy vs. Royal Helium | CGX Energy vs. Eco Oil Gas |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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