Correlation Between Group Ten and A-Cap Energy

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

By analyzing existing cross correlation between Group Ten Metals and A Cap Energy Limited, you can compare the effects of market volatilities on Group Ten and A-Cap 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 Group Ten with a short position of A-Cap Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group Ten and A-Cap Energy.

Diversification Opportunities for Group Ten and A-Cap Energy

-0.06

Correlation Coefficient

Group Ten  A-Cap Energy

Good diversification

The 3 months correlation between Group and A-Cap is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Group Ten Metals and A Cap Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Cap Energy and Group Ten 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 Group Ten Metals are associated (or correlated) with A-Cap Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Cap Energy has no effect on the direction of Group Ten i.e., Group Ten and A-Cap Energy go up and down completely randomly.

Pair Corralation between Group Ten and A-Cap Energy

If you would invest  8.00  in Group Ten Metals on September 4, 2024 and sell it today you would earn a total of  2.00  from holding Group Ten Metals or generate 25.0% return on investment over 90 days.

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

Group Ten Metals  vs.  A Cap Energy Limited

Group Ten Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Group Ten Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Group Ten reported solid returns over the last few months and may actually be approaching a breakup point.

A Cap Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Group Ten and A-Cap Energy

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

The idea behind Group Ten Metals and A Cap Energy Limited 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.