Correlation Between US Energy and PEDEVCO Corp

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

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

Diversification Opportunities for US Energy and PEDEVCO Corp

-0.51

Correlation Coefficient

US Energy  PEDEVCO Corp

Excellent diversification

The 3 months correlation between USEG and PEDEVCO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding US Energy Corp and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and US 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 US Energy Corp are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of US Energy i.e., US Energy and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between US Energy and PEDEVCO Corp

Given the investment horizon of 90 days US Energy Corp is expected to generate 2.27 times more return on investment than PEDEVCO Corp. However, US Energy is 2.27 times more volatile than PEDEVCO Corp. It trades about 0.17 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about -0.14 per unit of risk. If you would invest  94.00  in US Energy Corp on September 20, 2024 and sell it today you would earn a total of  58.00  from holding US Energy Corp or generate 61.7% return on investment over 90 days.

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

US Energy Corp  vs.  PEDEVCO Corp

US Energy Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Energy Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, US Energy reported solid returns over the last few months and may actually be approaching a breakup point.

PEDEVCO Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PEDEVCO Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with US Energy and PEDEVCO Corp

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

The idea behind US Energy Corp and PEDEVCO 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.