Correlation Between Broadpeak and Charwood Energy

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Can any of the company-specific risk be diversified away by investing in both Broadpeak and Charwood 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 Broadpeak and Charwood Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadpeak SA and Charwood Energy SA, you can compare the effects of market volatilities on Broadpeak and Charwood 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 Broadpeak with a short position of Charwood Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadpeak and Charwood Energy.

Diversification Opportunities for Broadpeak and Charwood Energy

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  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Broadpeak and Charwood Energy

If you would invest (100.00) in Charwood Energy SA on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Charwood Energy SA or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Broadpeak SA  vs.  Charwood Energy SA

 Performance 
       Timeline  
Broadpeak SA 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Broadpeak SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Charwood Energy SA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Charwood Energy SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Charwood Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Broadpeak and Charwood Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Broadpeak and Charwood Energy

The main advantage of trading using opposite Broadpeak and Charwood Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadpeak position performs unexpectedly, Charwood 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 Charwood Energy will offset losses from the drop in Charwood Energy's long position.
The idea behind Broadpeak SA and Charwood Energy SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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