Correlation Between United Energy and Canacol Energy
Can any of the company-specific risk be diversified away by investing in both United Energy and Canacol 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 United Energy and Canacol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Energy Corp and Canacol Energy, you can compare the effects of market volatilities on United Energy and Canacol 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 United Energy with a short position of Canacol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Energy and Canacol Energy.
Diversification Opportunities for United Energy and Canacol Energy
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Canacol is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding United Energy Corp and Canacol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canacol Energy and United 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 United Energy Corp are associated (or correlated) with Canacol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canacol Energy has no effect on the direction of United Energy i.e., United Energy and Canacol Energy go up and down completely randomly.
Pair Corralation between United Energy and Canacol Energy
Given the investment horizon of 90 days United Energy Corp is expected to generate 1.63 times more return on investment than Canacol Energy. However, United Energy is 1.63 times more volatile than Canacol Energy. It trades about 0.11 of its potential returns per unit of risk. Canacol Energy is currently generating about -0.01 per unit of risk. If you would invest 4.20 in United Energy Corp on October 23, 2024 and sell it today you would earn a total of 0.32 from holding United Energy Corp or generate 7.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Energy Corp vs. Canacol Energy
Performance |
| Timeline |
| United Energy Corp |
| Canacol Energy |
United Energy and Canacol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Energy and Canacol Energy
The main advantage of trading using opposite United Energy and Canacol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Energy position performs unexpectedly, Canacol 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 Canacol Energy will offset losses from the drop in Canacol Energy's long position.| United Energy vs. Calima Energy Limited | United Energy vs. Barrister Energy LLC | United Energy vs. Buru Energy Limited | United Energy vs. Altura Energy |
| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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