Correlation Between Alaska Energy and Onex Corp

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

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

Diversification Opportunities for Alaska Energy and Onex Corp

0.04

Correlation Coefficient

Alaska Energy  Onex Corp

Significant diversification

The 3 months correlation between Alaska and Onex is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Onex Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onex Corp and Alaska 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 Alaska Energy Metals are associated (or correlated) with Onex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onex Corp has no effect on the direction of Alaska Energy i.e., Alaska Energy and Onex Corp go up and down completely randomly.

Pair Corralation between Alaska Energy and Onex Corp

Assuming the 90 days trading horizon Alaska Energy Metals is expected to under-perform the Onex Corp. In addition to that, Alaska Energy is 5.79 times more volatile than Onex Corp. It trades about 0.0 of its total potential returns per unit of risk. Onex Corp is currently generating about 0.0 per unit of volatility. If you would invest  11,047  in Onex Corp on November 20, 2024 and sell it today you would lose (29.00) from holding Onex Corp or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Alaska Energy Metals  vs.  Onex Corp

Alaska Energy Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alaska Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Alaska Energy is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Onex Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onex Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Onex Corp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alaska Energy and Onex Corp

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

The idea behind Alaska Energy Metals and Onex 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.