Correlation Between Sound Energy and Altura Energy
Can any of the company-specific risk be diversified away by investing in both Sound Energy and Altura 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 Sound Energy and Altura Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Energy plc and Altura Energy, you can compare the effects of market volatilities on Sound Energy and Altura 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 Sound Energy with a short position of Altura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Energy and Altura Energy.
Diversification Opportunities for Sound Energy and Altura Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sound and Altura is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Sound Energy plc and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy and Sound 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 Sound Energy plc are associated (or correlated) with Altura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Energy has no effect on the direction of Sound Energy i.e., Sound Energy and Altura Energy go up and down completely randomly.
Pair Corralation between Sound Energy and Altura Energy
Assuming the 90 days horizon Sound Energy is expected to generate 1.0 times less return on investment than Altura Energy. In addition to that, Sound Energy is 4.02 times more volatile than Altura Energy. It trades about 0.05 of its total potential returns per unit of risk. Altura Energy is currently generating about 0.2 per unit of volatility. If you would invest 265.00 in Altura Energy on September 3, 2024 and sell it today you would earn a total of 742.00 from holding Altura Energy or generate 280.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sound Energy plc vs. Altura Energy
Performance |
| Timeline |
| Sound Energy plc |
| Altura Energy |
Sound Energy and Altura Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Energy and Altura Energy
The main advantage of trading using opposite Sound Energy and Altura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Energy position performs unexpectedly, Altura 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 Altura Energy will offset losses from the drop in Altura Energy's long position.| Sound Energy vs. CNX Resources Corp | Sound Energy vs. MV Oil Trust | Sound Energy vs. San Juan Basin | Sound Energy vs. VOC Energy Trust |
| Altura Energy vs. AER Energy Resources | Altura Energy vs. Alamo Energy Corp | Altura Energy vs. Arete Industries | Altura Energy vs. Barrister Energy LLC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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