Correlation Between Melbana Energy and Eco Oil

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

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

Diversification Opportunities for Melbana Energy and Eco Oil

0.0

Correlation Coefficient

Melbana Energy  Eco Oil

Pay attention - limited upside

The 3 months correlation between Melbana and Eco is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Melbana Energy Limited and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Oil Gas and Melbana 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 Melbana Energy Limited are associated (or correlated) with Eco Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Oil Gas has no effect on the direction of Melbana Energy i.e., Melbana Energy and Eco Oil go up and down completely randomly.

Pair Corralation between Melbana Energy and Eco Oil

If you would invest  16.00  in Eco Oil Gas on September 19, 2024 and sell it today you would lose (1.00) from holding Eco Oil Gas or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Melbana Energy Limited  vs.  Eco Oil Gas

Melbana Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eco Oil Gas

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Oil Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Eco Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Melbana Energy and Eco Oil

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

The idea behind Melbana Energy Limited and Eco Oil Gas 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.