Correlation Between Arkanova Energy and Tullow Oil

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

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

Diversification Opportunities for Arkanova Energy and Tullow Oil

0.0

Correlation Coefficient

Arkanova Energy  Tullow Oil

Pay attention - limited upside

The 3 months correlation between Arkanova and Tullow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arkanova Energy and Tullow Oil plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil plc and Arkanova 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 Arkanova Energy are associated (or correlated) with Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil plc has no effect on the direction of Arkanova Energy i.e., Arkanova Energy and Tullow Oil go up and down completely randomly.

Pair Corralation between Arkanova Energy and Tullow Oil

If you would invest  0.01  in Arkanova Energy on September 29, 2024 and sell it today you would earn a total of  0.00  from holding Arkanova Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Arkanova Energy  vs.  Tullow Oil plc

Arkanova Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkanova Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Arkanova Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tullow Oil plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tullow Oil plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential 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.

Pair Trading with Arkanova Energy and Tullow Oil

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

The idea behind Arkanova Energy and Tullow Oil plc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.