Correlation Between Beach Energy and Maggie Beer

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

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

Diversification Opportunities for Beach Energy and Maggie Beer

-0.37

Correlation Coefficient

Beach Energy  Maggie Beer

Very good diversification

The 3 months correlation between Beach and Maggie is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Beach Energy and Maggie Beer Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maggie Beer Holdings and Beach 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 Beach Energy are associated (or correlated) with Maggie Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maggie Beer Holdings has no effect on the direction of Beach Energy i.e., Beach Energy and Maggie Beer go up and down completely randomly.

Pair Corralation between Beach Energy and Maggie Beer

Assuming the 90 days trading horizon Beach Energy is expected to generate 0.83 times more return on investment than Maggie Beer. However, Beach Energy is 1.2 times less risky than Maggie Beer. It trades about 0.21 of its potential returns per unit of risk. Maggie Beer Holdings is currently generating about 0.02 per unit of risk. If you would invest  124.00  in Beach Energy on September 28, 2024 and sell it today you would earn a total of  15.00  from holding Beach Energy or generate 12.1% return on investment over 90 days.

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

Beach Energy  vs.  Maggie Beer Holdings

Beach Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beach Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Beach Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Maggie Beer Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maggie Beer Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Beach Energy and Maggie Beer

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

The idea behind Beach Energy and Maggie Beer Holdings 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .