Correlation Between PAO NOVATEK and Arkanova Energy

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

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

Diversification Opportunities for PAO NOVATEK and Arkanova Energy

-1.0

Correlation Coefficient

PAO NOVATEK  Arkanova Energy

Pay attention - limited upside

The 3 months correlation between PAO and Arkanova is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding PAO NOVATEK and Arkanova Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkanova Energy and PAO NOVATEK 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 PAO NOVATEK are associated (or correlated) with Arkanova Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkanova Energy has no effect on the direction of PAO NOVATEK i.e., PAO NOVATEK and Arkanova Energy go up and down completely randomly.

Pair Corralation between PAO NOVATEK and Arkanova Energy

If you would invest  0.01  in Arkanova Energy on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Arkanova Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

PAO NOVATEK  vs.  Arkanova Energy

PAO NOVATEK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAO NOVATEK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PAO NOVATEK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Arkanova Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkanova Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Arkanova Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PAO NOVATEK and Arkanova Energy

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

The idea behind PAO NOVATEK and Arkanova 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.

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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.