Correlation Between Accent Resources and SFC Energy

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

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

Diversification Opportunities for Accent Resources and SFC Energy

-0.47

Correlation Coefficient

Accent Resources  SFC Energy

Very good diversification

The 3 months correlation between Accent and SFC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Accent Resources NL and SFC Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFC Energy AG and Accent Resources 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 Accent Resources NL are associated (or correlated) with SFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFC Energy AG has no effect on the direction of Accent Resources i.e., Accent Resources and SFC Energy go up and down completely randomly.

Pair Corralation between Accent Resources and SFC Energy

Assuming the 90 days horizon Accent Resources NL is expected to generate 4.5 times more return on investment than SFC Energy. However, Accent Resources is 4.5 times more volatile than SFC Energy AG. It trades about 0.11 of its potential returns per unit of risk. SFC Energy AG is currently generating about -0.14 per unit of risk. If you would invest  1.10  in Accent Resources NL on September 3, 2024 and sell it today you would earn a total of  0.65  from holding Accent Resources NL or generate 59.09% return on investment over 90 days.

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

Accent Resources NL  vs.  SFC Energy AG

Accent Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accent Resources NL are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Accent Resources reported solid returns over the last few months and may actually be approaching a breakup point.

SFC Energy AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFC Energy AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Accent Resources and SFC Energy

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

The idea behind Accent Resources NL and SFC Energy AG 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.