Correlation Between Intermap Technologies and Western Energy

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

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

Diversification Opportunities for Intermap Technologies and Western Energy

-0.5

Correlation Coefficient

Intermap Technologies  Western Energy

Very good diversification

The 3 months correlation between Intermap and Western is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Intermap Technologies Corp and Western Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Energy Services and Intermap Technologies 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 Intermap Technologies Corp are associated (or correlated) with Western Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Energy Services has no effect on the direction of Intermap Technologies i.e., Intermap Technologies and Western Energy go up and down completely randomly.

Pair Corralation between Intermap Technologies and Western Energy

Assuming the 90 days trading horizon Intermap Technologies Corp is expected to generate 1.65 times more return on investment than Western Energy. However, Intermap Technologies is 1.65 times more volatile than Western Energy Services. It trades about 0.24 of its potential returns per unit of risk. Western Energy Services is currently generating about -0.08 per unit of risk. If you would invest  85.00  in Intermap Technologies Corp on September 2, 2024 and sell it today you would earn a total of  85.00  from holding Intermap Technologies Corp or generate 100.0% return on investment over 90 days.

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

Intermap Technologies Corp  vs.  Western Energy Services

Intermap Technologies

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intermap Technologies Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Intermap Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Western Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Intermap Technologies and Western Energy

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

The idea behind Intermap Technologies Corp and Western Energy Services 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.