Correlation Between Headwater Exploration and Kiwetinohk Energy

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

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

Diversification Opportunities for Headwater Exploration and Kiwetinohk Energy

0.15

Correlation Coefficient

Headwater Exploration  Kiwetinohk Energy

Average diversification

The 3 months correlation between Headwater and Kiwetinohk is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Headwater Exploration and Kiwetinohk Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiwetinohk Energy Corp and Headwater Exploration 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 Headwater Exploration are associated (or correlated) with Kiwetinohk Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiwetinohk Energy Corp has no effect on the direction of Headwater Exploration i.e., Headwater Exploration and Kiwetinohk Energy go up and down completely randomly.

Pair Corralation between Headwater Exploration and Kiwetinohk Energy

Assuming the 90 days horizon Headwater Exploration is expected to generate 5.63 times less return on investment than Kiwetinohk Energy. In addition to that, Headwater Exploration is 1.15 times more volatile than Kiwetinohk Energy Corp. It trades about 0.02 of its total potential returns per unit of risk. Kiwetinohk Energy Corp is currently generating about 0.13 per unit of volatility. If you would invest  952.00  in Kiwetinohk Energy Corp on September 3, 2024 and sell it today you would earn a total of  123.00  from holding Kiwetinohk Energy Corp or generate 12.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Headwater Exploration  vs.  Kiwetinohk Energy Corp

Headwater Exploration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Headwater Exploration are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Headwater Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Kiwetinohk Energy Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kiwetinohk Energy Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Kiwetinohk Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Headwater Exploration and Kiwetinohk Energy

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

The idea behind Headwater Exploration and Kiwetinohk 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.