Correlation Between Tullow Oil and Ngx Energy

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

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

Diversification Opportunities for Tullow Oil and Ngx Energy

0.68

Correlation Coefficient

Tullow Oil  Ngx Energy

Poor diversification

The 3 months correlation between Tullow and Ngx is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil plc and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and Tullow 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 Tullow Oil plc are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Tullow Oil i.e., Tullow Oil and Ngx Energy go up and down completely randomly.

Pair Corralation between Tullow Oil and Ngx Energy

Assuming the 90 days horizon Tullow Oil plc is expected to under-perform the Ngx Energy. In addition to that, Tullow Oil is 1.83 times more volatile than Ngx Energy International. It trades about 0.0 of its total potential returns per unit of risk. Ngx Energy International is currently generating about 0.0 per unit of volatility. If you would invest  76.00  in Ngx Energy International on September 5, 2024 and sell it today you would lose (2.00) from holding Ngx Energy International or give up 2.63% of portfolio value over 90 days.

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

Tullow Oil plc  vs.  Ngx Energy International

Tullow Oil plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ngx Energy International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ngx Energy International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ngx 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 Tullow Oil and Ngx Energy

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

The idea behind Tullow Oil plc and Ngx Energy International 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.