Correlation Between Calima Energy and Altura Energy

Can any of the company-specific risk be diversified away by investing in both Calima 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 Calima 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 Calima Energy Limited and Altura Energy, you can compare the effects of market volatilities on Calima 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 Calima Energy with a short position of Altura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calima Energy and Altura Energy.

Diversification Opportunities for Calima Energy and Altura Energy

0.48

Correlation Coefficient

Calima Energy  Altura Energy

Very weak diversification

The 3 months correlation between Calima and Altura is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Calima Energy Limited and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy and Calima 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 Calima Energy Limited 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 Calima Energy i.e., Calima Energy and Altura Energy go up and down completely randomly.

Pair Corralation between Calima Energy and Altura Energy

Assuming the 90 days horizon Calima Energy is expected to generate 2.37 times less return on investment than Altura Energy. But when comparing it to its historical volatility, Calima Energy Limited is 1.21 times less risky than Altura Energy. It trades about 0.13 of its potential returns per unit of risk. Altura Energy is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  594.00  in Altura Energy on September 1, 2024 and sell it today you would earn a total of  433.00  from holding Altura Energy or generate 72.9% return on investment over 90 days.

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

Calima Energy Limited  vs.  Altura Energy

Calima Energy Limited

Risk-Adjusted Performance

9 of 100

OK

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

Altura Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 19 (%) 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 Calima Energy and Altura Energy

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

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.