Correlation Between Bedford Energy and Aftermaster

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

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

Diversification Opportunities for Bedford Energy and Aftermaster

1.0

Correlation Coefficient

Bedford Energy  Aftermaster

No risk reduction

The 3 months correlation between Bedford and Aftermaster is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Bedford Energy and Aftermaster in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aftermaster and Bedford 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 Bedford Energy are associated (or correlated) with Aftermaster. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aftermaster has no effect on the direction of Bedford Energy i.e., Bedford Energy and Aftermaster go up and down completely randomly.

Pair Corralation between Bedford Energy and Aftermaster

If you would invest  0.01  in Aftermaster on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Aftermaster or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Bedford Energy  vs.  Aftermaster

Bedford Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bedford Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Bedford Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aftermaster

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aftermaster has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Aftermaster is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bedford Energy and Aftermaster

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

The idea behind Bedford Energy and Aftermaster 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.