Correlation Between TerraCom and Geo Energy
Can any of the company-specific risk be diversified away by investing in both TerraCom and Geo 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 TerraCom and Geo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TerraCom Limited and Geo Energy Resources, you can compare the effects of market volatilities on TerraCom and Geo 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 TerraCom with a short position of Geo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TerraCom and Geo Energy.
Diversification Opportunities for TerraCom and Geo Energy
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TerraCom and Geo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding TerraCom Limited and Geo Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo Energy Resources and TerraCom 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 TerraCom Limited are associated (or correlated) with Geo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Energy Resources has no effect on the direction of TerraCom i.e., TerraCom and Geo Energy go up and down completely randomly.
Pair Corralation between TerraCom and Geo Energy
Assuming the 90 days horizon TerraCom Limited is expected to under-perform the Geo Energy. In addition to that, TerraCom is 3.09 times more volatile than Geo Energy Resources. It trades about -0.04 of its total potential returns per unit of risk. Geo Energy Resources is currently generating about -0.02 per unit of volatility. If you would invest 24.00 in Geo Energy Resources on November 9, 2024 and sell it today you would lose (7.00) from holding Geo Energy Resources or give up 29.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 24.72% |
| Values | Daily Returns |
TerraCom Limited vs. Geo Energy Resources
Performance |
| Timeline |
| TerraCom Limited |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Geo Energy Resources |
TerraCom and Geo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TerraCom and Geo Energy
The main advantage of trading using opposite TerraCom and Geo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TerraCom position performs unexpectedly, Geo 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 Geo Energy will offset losses from the drop in Geo Energy's long position.| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
| Geo Energy vs. Yanzhou Coal Mining | Geo Energy vs. Indo Tambangraya Megah | Geo Energy vs. Bukit Asam Tbk | Geo Energy vs. Thungela Resources Limited |
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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