Correlation Between Birchcliff Energy and Altura Energy

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

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

Diversification Opportunities for Birchcliff Energy and Altura Energy

-0.78

Correlation Coefficient

Birchcliff Energy  Altura Energy

Pay attention - limited upside

The 3 months correlation between Birchcliff and Altura is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy and Birchcliff 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 Birchcliff Energy 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 Birchcliff Energy i.e., Birchcliff Energy and Altura Energy go up and down completely randomly.

Pair Corralation between Birchcliff Energy and Altura Energy

Assuming the 90 days horizon Birchcliff Energy is expected to under-perform the Altura Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Birchcliff Energy is 2.11 times less risky than Altura Energy. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Altura Energy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  624.00  in Altura Energy on September 12, 2024 and sell it today you would earn a total of  335.00  from holding Altura Energy or generate 53.69% return on investment over 90 days.

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

Birchcliff Energy  vs.  Altura Energy

Birchcliff Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Birchcliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Birchcliff Energy and Altura Energy

The main advantage of trading using opposite Birchcliff Energy and Altura Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy 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 Birchcliff Energy 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.