Correlation Between Biopower Operations and Xtra Energy

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

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

Diversification Opportunities for Biopower Operations and Xtra Energy

0.0

Correlation Coefficient

Biopower Operations  Xtra Energy

Pay attention - limited upside

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

Pair Corralation between Biopower Operations and Xtra Energy

If you would invest  18.00  in Xtra Energy Corp on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Xtra Energy Corp or generate 0.0% return on investment over 90 days.

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

Biopower Operations Corp  vs.  Xtra Energy Corp

Biopower Operations Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Xtra Energy Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtra Energy Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Xtra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biopower Operations and Xtra Energy

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

The idea behind Biopower Operations Corp and Xtra Energy Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.