Correlation Between Armada Hflr and Petro Usa

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Petro Usa 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 Armada Hflr and Petro Usa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Armada Hflr Pr and Petro Usa, you can compare the effects of market volatilities on Armada Hflr and Petro Usa 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 Armada Hflr with a short position of Petro Usa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Petro Usa.

Diversification Opportunities for Armada Hflr and Petro Usa

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Correlation Coefficient

Armada Hflr  Petro Usa

Pay attention - limited upside

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

Pair Corralation between Armada Hflr and Petro Usa

Considering the 90-day investment horizon Armada Hflr is expected to generate 495.64 times less return on investment than Petro Usa. But when comparing it to its historical volatility, Armada Hflr Pr is 36.09 times less risky than Petro Usa. It trades about 0.01 of its potential returns per unit of risk. Petro Usa is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  800.00  in Petro Usa on September 25, 2024 and sell it today you would lose (300.00) from holding Petro Usa or give up 37.5% of portfolio value over 90 days.

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

Armada Hflr Pr  vs.  Petro Usa

Armada Hflr Pr

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Petro Usa

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Petro Usa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Petro Usa is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Armada Hflr and Petro Usa

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

The idea behind Armada Hflr Pr and Petro Usa 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.