Correlation Between Commerce Resources and A Cap

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

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

Diversification Opportunities for Commerce Resources and A Cap

-0.52

Correlation Coefficient

Commerce Resources  A Cap

Excellent diversification

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

Pair Corralation between Commerce Resources and A Cap

If you would invest  8.00  in Commerce Resources Corp on September 13, 2024 and sell it today you would lose (2.00) from holding Commerce Resources Corp or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Commerce Resources Corp  vs.  A Cap Energy Limited

Commerce Resources Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commerce Resources Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Commerce Resources reported solid returns over the last few months and may actually be approaching a breakup point.

A Cap Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A Cap Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, A Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Commerce Resources and A Cap

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

The idea behind Commerce Resources Corp and A Cap Energy Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.