Correlation Between Stamper Oil and ALX Resources

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

By analyzing existing cross correlation between Stamper Oil Gas and ALX Resources Corp, you can compare the effects of market volatilities on Stamper Oil and ALX Resources 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 Stamper Oil with a short position of ALX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stamper Oil and ALX Resources.

Diversification Opportunities for Stamper Oil and ALX Resources

-0.3

Correlation Coefficient

Stamper Oil  ALX Resources

Very good diversification

The 3 months correlation between Stamper and ALX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stamper Oil Gas and ALX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALX Resources Corp and Stamper Oil 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 Stamper Oil Gas are associated (or correlated) with ALX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALX Resources Corp has no effect on the direction of Stamper Oil i.e., Stamper Oil and ALX Resources go up and down completely randomly.

Pair Corralation between Stamper Oil and ALX Resources

Assuming the 90 days horizon Stamper Oil is expected to generate 52.62 times less return on investment than ALX Resources. In addition to that, Stamper Oil is 2.19 times more volatile than ALX Resources Corp. It trades about 0.0 of its total potential returns per unit of risk. ALX Resources Corp is currently generating about 0.1 per unit of volatility. If you would invest  1.60  in ALX Resources Corp on September 24, 2024 and sell it today you would earn a total of  0.65  from holding ALX Resources Corp or generate 40.62% return on investment over 90 days.

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

Stamper Oil Gas  vs.  ALX Resources Corp

Stamper Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

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

ALX Resources Corp

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALX Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, ALX Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stamper Oil and ALX Resources

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

The idea behind Stamper Oil Gas and ALX Resources Corp 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 Valuation module to check real value of public entities based on technical and fundamental data.