Correlation Between AER Energy and Tiger Oil

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

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

Diversification Opportunities for AER Energy and Tiger Oil

0.12

Correlation Coefficient

AER Energy  Tiger Oil

Average diversification

The 3 months correlation between AER and Tiger is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding AER Energy Resources and Tiger Oil And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiger Oil And and AER 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 AER Energy Resources are associated (or correlated) with Tiger Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiger Oil And has no effect on the direction of AER Energy i.e., AER Energy and Tiger Oil go up and down completely randomly.

Pair Corralation between AER Energy and Tiger Oil

Given the investment horizon of 90 days AER Energy is expected to generate 4.02 times less return on investment than Tiger Oil. But when comparing it to its historical volatility, AER Energy Resources is 1.99 times less risky than Tiger Oil. It trades about 0.06 of its potential returns per unit of risk. Tiger Oil And is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Tiger Oil And on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Tiger Oil And or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

AER Energy Resources  vs.  Tiger Oil And

AER Energy Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AER Energy Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, AER Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Tiger Oil And

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiger Oil And are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Tiger Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AER Energy and Tiger Oil

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

The idea behind AER Energy Resources and Tiger Oil And 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.