Correlation Between Odyssey Energy and Sims

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

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

Diversification Opportunities for Odyssey Energy and Sims

0.12

Correlation Coefficient

Odyssey Energy  Sims

Average diversification

The 3 months correlation between Odyssey and Sims is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Energy and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims and Odyssey 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 Odyssey Energy are associated (or correlated) with Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Odyssey Energy i.e., Odyssey Energy and Sims go up and down completely randomly.

Pair Corralation between Odyssey Energy and Sims

Assuming the 90 days trading horizon Odyssey Energy is expected to generate 1.66 times less return on investment than Sims. In addition to that, Odyssey Energy is 2.85 times more volatile than Sims. It trades about 0.03 of its total potential returns per unit of risk. Sims is currently generating about 0.15 per unit of volatility. If you would invest  1,078  in Sims on September 12, 2024 and sell it today you would earn a total of  229.00  from holding Sims or generate 21.24% return on investment over 90 days.

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

Odyssey Energy  vs.  Sims

Odyssey Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Odyssey Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sims

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Sims unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Odyssey Energy and Sims

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

The idea behind Odyssey Energy and Sims 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.