Correlation Between A-Cap Energy and Silver Spruce

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

Diversification Opportunities for A-Cap Energy and Silver Spruce

-0.59

Correlation Coefficient

A-Cap Energy  Silver Spruce

Excellent diversification

The 3 months correlation between A-Cap and Silver is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding A Cap Energy Limited and Silver Spruce Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Spruce Resources 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 Silver Spruce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Spruce Resources has no effect on the direction of A-Cap Energy i.e., A-Cap Energy and Silver Spruce go up and down completely randomly.

Pair Corralation between A-Cap Energy and Silver Spruce

If you would invest  0.47  in Silver Spruce Resources on September 5, 2024 and sell it today you would lose (0.07) from holding Silver Spruce Resources or give up 14.89% of portfolio value over 90 days.

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

A Cap Energy Limited  vs.  Silver Spruce 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.

Silver Spruce Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Spruce Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental drivers, Silver Spruce reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with A-Cap Energy and Silver Spruce

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

The idea behind A Cap Energy Limited and Silver Spruce 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.