Correlation Between Questerre Energy and Zenith Energy
Can any of the company-specific risk be diversified away by investing in both Questerre Energy and Zenith 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 Questerre Energy and Zenith Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Questerre Energy and Zenith Energy, you can compare the effects of market volatilities on Questerre Energy and Zenith 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 Questerre Energy with a short position of Zenith Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Questerre Energy and Zenith Energy.
Diversification Opportunities for Questerre Energy and Zenith Energy
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Questerre and Zenith is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Questerre Energy and Zenith Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenith Energy and Questerre 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 Questerre Energy are associated (or correlated) with Zenith Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenith Energy has no effect on the direction of Questerre Energy i.e., Questerre Energy and Zenith Energy go up and down completely randomly.
Pair Corralation between Questerre Energy and Zenith Energy
Assuming the 90 days trading horizon Questerre Energy is expected to under-perform the Zenith Energy. But the stock apears to be less risky and, when comparing its historical volatility, Questerre Energy is 1.65 times less risky than Zenith Energy. The stock trades about -0.11 of its potential returns per unit of risk. The Zenith Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Zenith Energy on September 3, 2024 and sell it today you would lose (2.00) from holding Zenith Energy or give up 9.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Questerre Energy vs. Zenith Energy
Performance |
| Timeline |
| Questerre Energy |
| Zenith Energy |
Questerre Energy and Zenith Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Questerre Energy and Zenith Energy
The main advantage of trading using opposite Questerre Energy and Zenith Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Questerre Energy position performs unexpectedly, Zenith 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 Zenith Energy will offset losses from the drop in Zenith Energy's long position.| Questerre Energy vs. Dno ASA | Questerre Energy vs. Interoil Exploration and | Questerre Energy vs. Panoro Energy ASA | Questerre Energy vs. Golden Ocean Group |
| Zenith Energy vs. Kongsberg Automotive Holding | Zenith Energy vs. Questerre Energy | Zenith Energy vs. Okea ASA | Zenith Energy vs. Hunter Group ASA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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