Correlation Between Royal Helium and CGX Energy
Can any of the company-specific risk be diversified away by investing in both Royal Helium 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 Royal Helium and CGX Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Helium and CGX Energy, you can compare the effects of market volatilities on Royal Helium 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 Royal Helium with a short position of CGX Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Helium and CGX Energy.
Diversification Opportunities for Royal Helium and CGX Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Royal and CGX is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and Royal Helium 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 Royal Helium 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 Royal Helium i.e., Royal Helium and CGX Energy go up and down completely randomly.
Pair Corralation between Royal Helium and CGX Energy
Assuming the 90 days horizon Royal Helium is expected to under-perform the CGX Energy. In addition to that, Royal Helium is 1.03 times more volatile than CGX Energy. It trades about -0.12 of its total potential returns per unit of risk. CGX Energy is currently generating about 0.1 per unit of volatility. If you would invest 10.00 in CGX Energy on November 3, 2024 and sell it today you would earn a total of 1.00 from holding CGX Energy or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royal Helium vs. CGX Energy
Performance |
| Timeline |
| Royal Helium |
| CGX Energy |
Royal Helium and CGX Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Helium and CGX Energy
The main advantage of trading using opposite Royal Helium and CGX Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Helium 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.| Royal Helium vs. Desert Mountain Energy | Royal Helium vs. Avanti Energy | Royal Helium vs. Helium One Global | Royal Helium vs. Royal Helium |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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