Correlation Between Donaldson and Camber Energy

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

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

Diversification Opportunities for Donaldson and Camber Energy

-0.48

Correlation Coefficient

Donaldson  Camber Energy

Very good diversification

The 3 months correlation between Donaldson and Camber is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Donaldson and Camber Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camber Energy and Donaldson 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 Donaldson are associated (or correlated) with Camber Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camber Energy has no effect on the direction of Donaldson i.e., Donaldson and Camber Energy go up and down completely randomly.

Pair Corralation between Donaldson and Camber Energy

Considering the 90-day investment horizon Donaldson is expected to generate 0.19 times more return on investment than Camber Energy. However, Donaldson is 5.19 times less risky than Camber Energy. It trades about 0.17 of its potential returns per unit of risk. Camber Energy is currently generating about -0.07 per unit of risk. If you would invest  7,105  in Donaldson on September 2, 2024 and sell it today you would earn a total of  700.00  from holding Donaldson or generate 9.85% return on investment over 90 days.

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

Donaldson  vs.  Camber Energy

Donaldson

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Donaldson are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Donaldson may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Camber Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camber Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Donaldson and Camber Energy

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

The idea behind Donaldson and Camber 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.