Correlation Between Alligator Energy and Anfield Resources

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

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

Diversification Opportunities for Alligator Energy and Anfield Resources

0.58

Correlation Coefficient

Alligator Energy  Anfield Resources

Very weak diversification

The 3 months correlation between Alligator and Anfield is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Alligator Energy Limited and Anfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anfield Resources and Alligator 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 Alligator Energy Limited are associated (or correlated) with Anfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anfield Resources has no effect on the direction of Alligator Energy i.e., Alligator Energy and Anfield Resources go up and down completely randomly.

Pair Corralation between Alligator Energy and Anfield Resources

Assuming the 90 days horizon Alligator Energy Limited is expected to generate 1.26 times more return on investment than Anfield Resources. However, Alligator Energy is 1.26 times more volatile than Anfield Resources. It trades about 0.0 of its potential returns per unit of risk. Anfield Resources is currently generating about -0.01 per unit of risk. If you would invest  2.76  in Alligator Energy Limited on December 30, 2024 and sell it today you would lose (1.16) from holding Alligator Energy Limited or give up 42.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Alligator Energy Limited  vs.  Anfield Resources

Alligator Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alligator Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Alligator Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Anfield Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Anfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Alligator Energy and Anfield Resources

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

The idea behind Alligator Energy Limited and Anfield Resources 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.