Correlation Between Energy Absolute and SRI TRANG

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

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

Diversification Opportunities for Energy Absolute and SRI TRANG

-0.74

Correlation Coefficient

Energy Absolute  SRI TRANG

Pay attention - limited upside

The 3 months correlation between Energy and SRI is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Energy Absolute Public and SRI TRANG GLOVES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRI TRANG GLOVES and Energy Absolute 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 Energy Absolute Public are associated (or correlated) with SRI TRANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRI TRANG GLOVES has no effect on the direction of Energy Absolute i.e., Energy Absolute and SRI TRANG go up and down completely randomly.

Pair Corralation between Energy Absolute and SRI TRANG

Assuming the 90 days horizon Energy Absolute is expected to generate 8.82 times less return on investment than SRI TRANG. But when comparing it to its historical volatility, Energy Absolute Public is 1.04 times less risky than SRI TRANG. It trades about 0.03 of its potential returns per unit of risk. SRI TRANG GLOVES is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  746.00  in SRI TRANG GLOVES on September 15, 2024 and sell it today you would earn a total of  324.00  from holding SRI TRANG GLOVES or generate 43.43% return on investment over 90 days.

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

Energy Absolute Public  vs.  SRI TRANG GLOVES

Energy Absolute Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Energy Absolute Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SRI TRANG GLOVES

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SRI TRANG GLOVES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, SRI TRANG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Absolute and SRI TRANG

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

The idea behind Energy Absolute Public and SRI TRANG GLOVES 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..