Correlation Between Ring Energy and HighPeak Energy

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

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

Diversification Opportunities for Ring Energy and HighPeak Energy

0.23

Correlation Coefficient

Ring Energy  HighPeak Energy

Modest diversification

The 3 months correlation between Ring and HighPeak is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and HighPeak Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HighPeak Energy and Ring 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 Ring Energy are associated (or correlated) with HighPeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HighPeak Energy has no effect on the direction of Ring Energy i.e., Ring Energy and HighPeak Energy go up and down completely randomly.

Pair Corralation between Ring Energy and HighPeak Energy

Considering the 90-day investment horizon Ring Energy is expected to under-perform the HighPeak Energy. But the stock apears to be less risky and, when comparing its historical volatility, Ring Energy is 3.32 times less risky than HighPeak Energy. The stock trades about -0.1 of its potential returns per unit of risk. The HighPeak Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  424.00  in HighPeak Energy on September 15, 2024 and sell it today you would lose (49.00) from holding HighPeak Energy or give up 11.56% of portfolio value over 90 days.

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

Ring Energy  vs.  HighPeak Energy

Ring Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

HighPeak Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HighPeak Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, HighPeak Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ring Energy and HighPeak Energy

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

The idea behind Ring Energy and HighPeak 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.