Correlation Between ROK Resources and Prospera Energy
Can any of the company-specific risk be diversified away by investing in both ROK Resources and Prospera 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 ROK Resources and Prospera Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ROK Resources and Prospera Energy, you can compare the effects of market volatilities on ROK Resources and Prospera 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 ROK Resources with a short position of Prospera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROK Resources and Prospera Energy.
Diversification Opportunities for ROK Resources and Prospera Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between ROK and Prospera is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ROK Resources and Prospera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospera Energy and ROK Resources 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 ROK Resources are associated (or correlated) with Prospera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospera Energy has no effect on the direction of ROK Resources i.e., ROK Resources and Prospera Energy go up and down completely randomly.
Pair Corralation between ROK Resources and Prospera Energy
Assuming the 90 days horizon ROK Resources is expected to under-perform the Prospera Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, ROK Resources is 1.42 times less risky than Prospera Energy. The otc stock trades about -0.16 of its potential returns per unit of risk. The Prospera Energy is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Prospera Energy on November 3, 2024 and sell it today you would earn a total of 0.98 from holding Prospera Energy or generate 46.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ROK Resources vs. Prospera Energy
Performance |
| Timeline |
| ROK Resources |
| Prospera Energy |
ROK Resources and Prospera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ROK Resources and Prospera Energy
The main advantage of trading using opposite ROK Resources and Prospera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROK Resources position performs unexpectedly, Prospera 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 Prospera Energy will offset losses from the drop in Prospera Energy's long position.| ROK Resources vs. Legacy Education | ROK Resources vs. Apple Inc | ROK Resources vs. Microsoft | ROK Resources vs. NVIDIA |
| Prospera Energy vs. ROK Resources | Prospera Energy vs. PetroShale | Prospera Energy vs. Pieridae Energy Limited | Prospera Energy vs. Bengal Energy |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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