Correlation Between Calima Energy and Barrister Energy

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

Diversification Opportunities for Calima Energy and Barrister Energy

0.52

Correlation Coefficient

Calima Energy  Barrister Energy

Very weak diversification

The 3 months correlation between Calima and Barrister is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Calima Energy Limited and Barrister Energy LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrister Energy LLC 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 Barrister Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrister Energy LLC has no effect on the direction of Calima Energy i.e., Calima Energy and Barrister Energy go up and down completely randomly.

Pair Corralation between Calima Energy and Barrister Energy

Assuming the 90 days horizon Calima Energy Limited is expected to generate 3.33 times more return on investment than Barrister Energy. However, Calima Energy is 3.33 times more volatile than Barrister Energy LLC. It trades about 0.13 of its potential returns per unit of risk. Barrister Energy LLC is currently generating about 0.13 per unit of risk. If you would invest  1.00  in Calima Energy Limited on September 1, 2024 and sell it today you would earn a total of  0.25  from holding Calima Energy Limited or generate 25.0% 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.  Barrister Energy LLC

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.

Barrister Energy LLC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barrister Energy LLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Barrister Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Calima Energy and Barrister Energy

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

The idea behind Calima Energy Limited and Barrister Energy LLC 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.