Correlation Between Altura Energy and Valeura Energy

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

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

Diversification Opportunities for Altura Energy and Valeura Energy

0.81

Correlation Coefficient

Altura Energy  Valeura Energy

Very poor diversification

The 3 months correlation between Altura and Valeura is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and Altura 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 Altura Energy are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Altura Energy i.e., Altura Energy and Valeura Energy go up and down completely randomly.

Pair Corralation between Altura Energy and Valeura Energy

Assuming the 90 days horizon Altura Energy is expected to generate 1.0 times more return on investment than Valeura Energy. However, Altura Energy is 1.0 times more volatile than Valeura Energy. It trades about 0.21 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.18 per unit of risk. If you would invest  595.00  in Altura Energy on September 12, 2024 and sell it today you would earn a total of  364.00  from holding Altura Energy or generate 61.18% return on investment over 90 days.

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

Altura Energy  vs.  Valeura Energy

Altura Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Altura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Valeura Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altura Energy and Valeura Energy

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

The idea behind Altura Energy and Valeura 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.