Correlation Between ADX Energy and MMEX Resources

Can any of the company-specific risk be diversified away by investing in both ADX Energy and MMEX Resources 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 ADX Energy and MMEX Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADX Energy and MMEX Resources Corp, you can compare the effects of market volatilities on ADX Energy and MMEX Resources 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 ADX Energy with a short position of MMEX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADX Energy and MMEX Resources.

Diversification Opportunities for ADX Energy and MMEX Resources

0.17

Correlation Coefficient

ADX Energy  MMEX Resources

Average diversification

The 3 months correlation between ADX and MMEX is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding ADX Energy and MMEX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMEX Resources Corp and ADX 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 ADX Energy are associated (or correlated) with MMEX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMEX Resources Corp has no effect on the direction of ADX Energy i.e., ADX Energy and MMEX Resources go up and down completely randomly.

Pair Corralation between ADX Energy and MMEX Resources

Assuming the 90 days horizon ADX Energy is expected to under-perform the MMEX Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, ADX Energy is 15.24 times less risky than MMEX Resources. The pink sheet trades about -0.12 of its potential returns per unit of risk. The MMEX Resources Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.01  in MMEX Resources Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding MMEX Resources Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ADX Energy  vs.  MMEX Resources Corp

ADX Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADX Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MMEX Resources Corp

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MMEX Resources Corp are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, MMEX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADX Energy and MMEX Resources

The main advantage of trading using opposite ADX Energy and MMEX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADX Energy position performs unexpectedly, MMEX Resources 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 MMEX Resources will offset losses from the drop in MMEX Resources' long position.

The idea behind ADX Energy and MMEX Resources Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.