Correlation Between Select Energy and COMBA TELECOM

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

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

Diversification Opportunities for Select Energy and COMBA TELECOM

-0.74

Correlation Coefficient

Select Energy  COMBA TELECOM

Pay attention - limited upside

The 3 months correlation between Select and COMBA is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Select Energy Services and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and Select 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 Select Energy Services are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of Select Energy i.e., Select Energy and COMBA TELECOM go up and down completely randomly.

Pair Corralation between Select Energy and COMBA TELECOM

Assuming the 90 days trading horizon Select Energy Services is expected to under-perform the COMBA TELECOM. In addition to that, Select Energy is 1.1 times more volatile than COMBA TELECOM SYST. It trades about -0.36 of its total potential returns per unit of risk. COMBA TELECOM SYST is currently generating about 0.21 per unit of volatility. If you would invest  12.00  in COMBA TELECOM SYST on September 24, 2024 and sell it today you would earn a total of  1.00  from holding COMBA TELECOM SYST or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Select Energy Services  vs.  COMBA TELECOM SYST

Select Energy Services

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Select Energy Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Select Energy reported solid returns over the last few months and may actually be approaching a breakup point.

COMBA TELECOM SYST

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Select Energy and COMBA TELECOM

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

The idea behind Select Energy Services and COMBA TELECOM SYST 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.