Correlation Between ASX and Odyssey Energy

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

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

Diversification Opportunities for ASX and Odyssey Energy

-0.32

Correlation Coefficient

ASX  Odyssey Energy

Very good diversification

The 3 months correlation between ASX and Odyssey is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding ASX and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy and ASX 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 ASX are associated (or correlated) with Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of ASX i.e., ASX and Odyssey Energy go up and down completely randomly.

Pair Corralation between ASX and Odyssey Energy

Assuming the 90 days trading horizon ASX is expected to generate 0.2 times more return on investment than Odyssey Energy. However, ASX is 4.95 times less risky than Odyssey Energy. It trades about 0.05 of its potential returns per unit of risk. Odyssey Energy is currently generating about -0.04 per unit of risk. If you would invest  6,393  in ASX on September 27, 2024 and sell it today you would earn a total of  210.00  from holding ASX or generate 3.28% return on investment over 90 days.

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

ASX  vs.  Odyssey Energy

ASX

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASX are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ASX is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Odyssey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Odyssey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ASX and Odyssey Energy

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

The idea behind ASX and Odyssey Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.