Correlation Between Horizon Oil and Ngx Energy

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

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

Diversification Opportunities for Horizon Oil and Ngx Energy

-0.27

Correlation Coefficient

Horizon Oil  Ngx Energy

Very good diversification

The 3 months correlation between Horizon and Ngx is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Oil Limited and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and Horizon Oil 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 Horizon Oil Limited are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Horizon Oil i.e., Horizon Oil and Ngx Energy go up and down completely randomly.

Pair Corralation between Horizon Oil and Ngx Energy

Assuming the 90 days horizon Horizon Oil Limited is expected to generate 2.31 times more return on investment than Ngx Energy. However, Horizon Oil is 2.31 times more volatile than Ngx Energy International. It trades about 0.03 of its potential returns per unit of risk. Ngx Energy International is currently generating about -0.03 per unit of risk. If you would invest  12.00  in Horizon Oil Limited on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Horizon Oil Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Horizon Oil Limited  vs.  Ngx Energy International

Horizon Oil Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Oil Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Horizon Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Ngx Energy International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Horizon Oil and Ngx Energy

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

The idea behind Horizon Oil Limited and Ngx Energy International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.