Correlation Between Riley Exploration and PEDEVCO Corp

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

Diversification Opportunities for Riley Exploration and PEDEVCO Corp

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Riley and PEDEVCO is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Riley Exploration Permian and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and Riley Exploration 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 Riley Exploration Permian are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of Riley Exploration i.e., Riley Exploration and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between Riley Exploration and PEDEVCO Corp

Given the investment horizon of 90 days Riley Exploration Permian is expected to generate 0.84 times more return on investment than PEDEVCO Corp. However, Riley Exploration Permian is 1.2 times less risky than PEDEVCO Corp. It trades about 0.1 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about 0.01 per unit of risk. If you would invest  2,591  in Riley Exploration Permian on September 3, 2024 and sell it today you would earn a total of  901.00  from holding Riley Exploration Permian or generate 34.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Riley Exploration Permian  vs.  PEDEVCO Corp

 Performance 
       Timeline  
Riley Exploration Permian 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Riley Exploration Permian are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Riley Exploration showed solid returns over the last few months and may actually be approaching a breakup point.
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.

Riley Exploration and PEDEVCO Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Riley Exploration and PEDEVCO Corp

The main advantage of trading using opposite Riley Exploration and PEDEVCO Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Riley Exploration position performs unexpectedly, PEDEVCO Corp 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 PEDEVCO Corp will offset losses from the drop in PEDEVCO Corp's long position.
The idea behind Riley Exploration Permian and PEDEVCO Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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