Correlation Between A-Cap Energy and Canadian Palladium

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

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

Diversification Opportunities for A-Cap Energy and Canadian Palladium

0.22

Correlation Coefficient

A-Cap Energy  Canadian Palladium

Modest diversification

The 3 months correlation between A-Cap and Canadian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited and Canadian Palladium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Palladium and A-Cap 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 A Cap Energy Limited are associated (or correlated) with Canadian Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Palladium has no effect on the direction of A-Cap Energy i.e., A-Cap Energy and Canadian Palladium go up and down completely randomly.

Pair Corralation between A-Cap Energy and Canadian Palladium

If you would invest  2.60  in A Cap Energy Limited on September 4, 2024 and sell it today you would earn a total of  0.00  from holding A Cap Energy Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

A Cap Energy Limited  vs.  Canadian Palladium Resources

A Cap Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Cap Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, A-Cap Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Canadian Palladium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Palladium Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with A-Cap Energy and Canadian Palladium

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

The idea behind A Cap Energy Limited and Canadian Palladium Resources 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.