Correlation Between Shelf Drilling and Golden Energy

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

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

Diversification Opportunities for Shelf Drilling and Golden Energy

0.71

Correlation Coefficient

Shelf Drilling  Golden Energy

Poor diversification

The 3 months correlation between Shelf and Golden is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore and Shelf Drilling 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 Shelf Drilling are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and Golden Energy go up and down completely randomly.

Pair Corralation between Shelf Drilling and Golden Energy

Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Golden Energy. But the stock apears to be less risky and, when comparing its historical volatility, Shelf Drilling is 1.19 times less risky than Golden Energy. The stock trades about -0.16 of its potential returns per unit of risk. The Golden Energy Offshore is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,390  in Golden Energy Offshore on September 15, 2024 and sell it today you would lose (390.00) from holding Golden Energy Offshore or give up 16.32% of portfolio value over 90 days.

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

Shelf Drilling  vs.  Golden Energy Offshore

Shelf Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelf Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Golden Energy Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Shelf Drilling and Golden Energy

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

The idea behind Shelf Drilling and Golden Energy Offshore 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.