Correlation Between Ivanhoe Energy and PJX Resources

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

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

Diversification Opportunities for Ivanhoe Energy and PJX Resources

-0.56

Correlation Coefficient

Ivanhoe Energy  PJX Resources

Excellent diversification

The 3 months correlation between Ivanhoe and PJX is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ivanhoe Energy and PJX Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJX Resources and Ivanhoe 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 Ivanhoe Energy are associated (or correlated) with PJX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJX Resources has no effect on the direction of Ivanhoe Energy i.e., Ivanhoe Energy and PJX Resources go up and down completely randomly.

Pair Corralation between Ivanhoe Energy and PJX Resources

Assuming the 90 days horizon Ivanhoe Energy is expected to generate 0.53 times more return on investment than PJX Resources. However, Ivanhoe Energy is 1.88 times less risky than PJX Resources. It trades about 0.08 of its potential returns per unit of risk. PJX Resources is currently generating about -0.09 per unit of risk. If you would invest  1,056  in Ivanhoe Energy on September 13, 2024 and sell it today you would earn a total of  155.00  from holding Ivanhoe Energy or generate 14.68% return on investment over 90 days.

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

Ivanhoe Energy  vs.  PJX Resources

Ivanhoe Energy

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ivanhoe Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ivanhoe Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

PJX Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJX Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ivanhoe Energy and PJX Resources

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

The idea behind Ivanhoe Energy and PJX Resources 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 Global Correlations module to find global opportunities by holding instruments from different markets.