Correlation Between Conquest Resources and Falcon Energy

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

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

Diversification Opportunities for Conquest Resources and Falcon Energy

-0.44

Correlation Coefficient

Conquest Resources  Falcon Energy

Very good diversification

The 3 months correlation between Conquest and Falcon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Conquest Resources and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials and Conquest 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 Conquest Resources are associated (or correlated) with Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Conquest Resources i.e., Conquest Resources and Falcon Energy go up and down completely randomly.

Pair Corralation between Conquest Resources and Falcon Energy

Assuming the 90 days horizon Conquest Resources is not expected to generate positive returns. Moreover, Conquest Resources is 2.89 times more volatile than Falcon Energy Materials. It trades away all of its potential returns to assume current level of volatility. Falcon Energy Materials is currently generating about 0.02 per unit of risk. If you would invest  68.00  in Falcon Energy Materials on September 14, 2024 and sell it today you would earn a total of  1.00  from holding Falcon Energy Materials or generate 1.47% return on investment over 90 days.

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

Conquest Resources  vs.  Falcon Energy Materials

Conquest Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conquest Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Conquest Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Falcon Energy Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Energy Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Falcon Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Conquest Resources and Falcon Energy

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

The idea behind Conquest Resources and Falcon Energy Materials 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.