Correlation Between Golden Energy and Black Sea

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

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

Diversification Opportunities for Golden Energy and Black Sea

0.58

Correlation Coefficient

Golden Energy  Black Sea

Very weak diversification

The 3 months correlation between Golden and Black is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Golden Energy Offshore and Black Sea Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Sea Property and Golden 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 Golden Energy Offshore are associated (or correlated) with Black Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Sea Property has no effect on the direction of Golden Energy i.e., Golden Energy and Black Sea go up and down completely randomly.

Pair Corralation between Golden Energy and Black Sea

Assuming the 90 days trading horizon Golden Energy Offshore is expected to under-perform the Black Sea. But the stock apears to be less risky and, when comparing its historical volatility, Golden Energy Offshore is 11.01 times less risky than Black Sea. The stock trades about -0.02 of its potential returns per unit of risk. The Black Sea Property is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Black Sea Property on September 16, 2024 and sell it today you would lose (4.00) from holding Black Sea Property or give up 23.53% of portfolio value over 90 days.

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

Golden Energy Offshore  vs.  Black Sea Property

Golden Energy Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Black Sea Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Sea Property are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Black Sea disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Energy and Black Sea

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

The idea behind Golden Energy Offshore and Black Sea Property 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.