Correlation Between Journey Energy and Valeura Energy

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

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

Diversification Opportunities for Journey Energy and Valeura Energy

-0.76

Correlation Coefficient

Journey Energy  Valeura Energy

Pay attention - limited upside

The 3 months correlation between Journey and Valeura is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Journey Energy and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and Journey 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 Journey Energy are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Journey Energy i.e., Journey Energy and Valeura Energy go up and down completely randomly.

Pair Corralation between Journey Energy and Valeura Energy

Assuming the 90 days trading horizon Journey Energy is expected to under-perform the Valeura Energy. In addition to that, Journey Energy is 1.01 times more volatile than Valeura Energy. It trades about -0.22 of its total potential returns per unit of risk. Valeura Energy is currently generating about 0.2 per unit of volatility. If you would invest  599.00  in Valeura Energy on October 1, 2024 and sell it today you would earn a total of  63.00  from holding Valeura Energy or generate 10.52% return on investment over 90 days.

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

Journey Energy  vs.  Valeura Energy

Journey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Energy 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 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.

Valeura Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Journey Energy and Valeura Energy

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

The idea behind Journey Energy and Valeura Energy 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.