Correlation Between Talon Energy and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Talon Energy and Xinjiang Goldwind 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 Talon Energy and Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talon Energy and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Talon Energy and Xinjiang Goldwind 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 Talon Energy with a short position of Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talon Energy and Xinjiang Goldwind.
Diversification Opportunities for Talon Energy and Xinjiang Goldwind
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Talon and Xinjiang is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Talon Energy and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science and Talon 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 Talon Energy are associated (or correlated) with Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Talon Energy i.e., Talon Energy and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Talon Energy and Xinjiang Goldwind
Assuming the 90 days horizon Talon Energy is expected to generate 15.9 times more return on investment than Xinjiang Goldwind. However, Talon Energy is 15.9 times more volatile than Xinjiang Goldwind Science. It trades about 0.09 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about 0.02 per unit of risk. If you would invest 0.50 in Talon Energy on September 1, 2024 and sell it today you would earn a total of 4.50 from holding Talon Energy or generate 900.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 36.1% |
Values | Daily Returns |
Talon Energy vs. Xinjiang Goldwind Science
Performance |
Timeline |
Talon Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xinjiang Goldwind Science |
Talon Energy and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Talon Energy and Xinjiang Goldwind
The main advantage of trading using opposite Talon Energy and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talon Energy position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind's long position.Talon Energy vs. Datadog | Talon Energy vs. Cabo Drilling Corp | Talon Energy vs. Seadrill Limited | Talon Energy vs. Awilco Drilling PLC |
Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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