Correlation Between Algonquin Power and Indus Gas

Can any of the company-specific risk be diversified away by investing in both Algonquin Power and Indus Gas 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 Algonquin Power and Indus Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Algonquin Power Utilities and Indus Gas, you can compare the effects of market volatilities on Algonquin Power and Indus Gas 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 Algonquin Power with a short position of Indus Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Indus Gas.

Diversification Opportunities for Algonquin Power and Indus Gas

0.0

Correlation Coefficient

Algonquin Power  Indus Gas

Pay attention - limited upside

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

Pair Corralation between Algonquin Power and Indus Gas

If you would invest  0.00  in Indus Gas on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Indus Gas or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Algonquin Power Utilities  vs.  Indus Gas

Algonquin Power Utilities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Indus Gas

Risk-Adjusted Performance

0 of 100

Solid

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

Pair Trading with Algonquin Power and Indus Gas

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

The idea behind Algonquin Power Utilities and Indus Gas 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.