Correlation Between Black Dragon and Altura Energy

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

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

Diversification Opportunities for Black Dragon and Altura Energy

0.0

Correlation Coefficient

Black Dragon  Altura Energy

Pay attention - limited upside

The 3 months correlation between Black and Altura is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Black Dragon Resource and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy and Black Dragon 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 Black Dragon Resource are associated (or correlated) with Altura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Energy has no effect on the direction of Black Dragon i.e., Black Dragon and Altura Energy go up and down completely randomly.

Pair Corralation between Black Dragon and Altura Energy

If you would invest  603.00  in Altura Energy on September 17, 2024 and sell it today you would earn a total of  372.00  from holding Altura Energy or generate 61.69% return on investment over 90 days.

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

Black Dragon Resource  vs.  Altura Energy

Black Dragon Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Dragon Resource has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Black Dragon is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Black Dragon and Altura Energy

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

The idea behind Black Dragon Resource and Altura 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.