Correlation Between ADX Energy and Rockdale Resources

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

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

Diversification Opportunities for ADX Energy and Rockdale Resources

0.0

Correlation Coefficient

ADX Energy  Rockdale Resources

Pay attention - limited upside

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

Pair Corralation between ADX Energy and Rockdale Resources

If you would invest  4.00  in ADX Energy on December 2, 2024 and sell it today you would lose (2.92) from holding ADX Energy or give up 73.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ADX Energy  vs.  Rockdale Resources Corp

ADX Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADX Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ADX Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Rockdale Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rockdale Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Rockdale Resources 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 ADX Energy and Rockdale Resources

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

The idea behind ADX Energy and Rockdale Resources 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.