Correlation Between Valeura Energy and Arete Industries

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

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

Diversification Opportunities for Valeura Energy and Arete Industries

0.0

Correlation Coefficient

Valeura Energy  Arete Industries

Pay attention - limited upside

The 3 months correlation between Valeura and Arete is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Arete Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arete Industries and Valeura 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 Valeura Energy are associated (or correlated) with Arete Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arete Industries has no effect on the direction of Valeura Energy i.e., Valeura Energy and Arete Industries go up and down completely randomly.

Pair Corralation between Valeura Energy and Arete Industries

If you would invest  391.00  in Valeura Energy on September 13, 2024 and sell it today you would earn a total of  76.00  from holding Valeura Energy or generate 19.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Valeura Energy  vs.  Arete Industries

Valeura Energy

Risk-Adjusted Performance

13 of 100

Good

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

Arete Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arete Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Arete Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Valeura Energy and Arete Industries

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

The idea behind Valeura Energy and Arete Industries 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.