Correlation Between Energy Services and Guinness Atkinson

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

Diversification Opportunities for Energy Services and Guinness Atkinson

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between ENERGY and Guinness is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Guinness Atkinson Alternative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson and Energy Services 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 Energy Services Fund are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson has no effect on the direction of Energy Services i.e., Energy Services and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Energy Services and Guinness Atkinson

Assuming the 90 days horizon Energy Services Fund is expected to generate 1.41 times more return on investment than Guinness Atkinson. However, Energy Services is 1.41 times more volatile than Guinness Atkinson Alternative. It trades about 0.02 of its potential returns per unit of risk. Guinness Atkinson Alternative is currently generating about 0.01 per unit of risk. If you would invest  24,104  in Energy Services Fund on September 1, 2024 and sell it today you would earn a total of  523.00  from holding Energy Services Fund or generate 2.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Energy Services Fund  vs.  Guinness Atkinson Alternative

 Performance 
       Timeline  
Energy Services 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Energy Services Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Energy Services may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Guinness Atkinson 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guinness Atkinson Alternative has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Guinness Atkinson is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Energy Services and Guinness Atkinson Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Energy Services and Guinness Atkinson

The main advantage of trading using opposite Energy Services and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson's long position.
The idea behind Energy Services Fund and Guinness Atkinson Alternative 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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