Correlation Between Baselode Energy and ALX Resources

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

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

Diversification Opportunities for Baselode Energy and ALX Resources

-0.14

Correlation Coefficient

Baselode Energy  ALX Resources

Good diversification

The 3 months correlation between Baselode and ALX is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Baselode Energy Corp and ALX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALX Resources Corp and Baselode 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 Baselode Energy Corp are associated (or correlated) with ALX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALX Resources Corp has no effect on the direction of Baselode Energy i.e., Baselode Energy and ALX Resources go up and down completely randomly.

Pair Corralation between Baselode Energy and ALX Resources

Assuming the 90 days horizon Baselode Energy Corp is expected to under-perform the ALX Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Baselode Energy Corp is 2.54 times less risky than ALX Resources. The otc stock trades about -0.07 of its potential returns per unit of risk. The ALX Resources Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.96  in ALX Resources Corp on September 15, 2024 and sell it today you would earn a total of  0.11  from holding ALX Resources Corp or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Baselode Energy Corp  vs.  ALX Resources Corp

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic 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.

ALX Resources Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALX Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, ALX Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baselode Energy and ALX Resources

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

The idea behind Baselode Energy Corp and ALX Resources 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 Commodity Directory module to find actively traded commodities issued by global exchanges.