Correlation Between A-Cap Energy and Edison Cobalt

Can any of the company-specific risk be diversified away by investing in both A-Cap Energy and Edison Cobalt 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 Edison Cobalt 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 Edison Cobalt Corp, you can compare the effects of market volatilities on A-Cap Energy and Edison Cobalt 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 Edison Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of A-Cap Energy and Edison Cobalt.

Diversification Opportunities for A-Cap Energy and Edison Cobalt

0.21

Correlation Coefficient

A-Cap Energy  Edison Cobalt

Modest diversification

The 3 months correlation between A-Cap and Edison is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited and Edison Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edison Cobalt Corp 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 Edison Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edison Cobalt Corp has no effect on the direction of A-Cap Energy i.e., A-Cap Energy and Edison Cobalt go up and down completely randomly.

Pair Corralation between A-Cap Energy and Edison Cobalt

If you would invest  8.11  in Edison Cobalt Corp on September 2, 2024 and sell it today you would lose (1.66) from holding Edison Cobalt Corp or give up 20.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

A Cap Energy Limited  vs.  Edison Cobalt Corp

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.

Edison Cobalt Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edison Cobalt Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Edison Cobalt reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with A-Cap Energy and Edison Cobalt

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

The idea behind A Cap Energy Limited and Edison Cobalt 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.