Correlation Between Amotiv and Valeura Energy

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

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

Diversification Opportunities for Amotiv and Valeura Energy

-0.75

Correlation Coefficient

Amotiv  Valeura Energy

Pay attention - limited upside

The 3 months correlation between Amotiv and Valeura is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amotiv Limited and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and Amotiv 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 Amotiv Limited are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Amotiv i.e., Amotiv and Valeura Energy go up and down completely randomly.

Pair Corralation between Amotiv and Valeura Energy

Assuming the 90 days trading horizon Amotiv is expected to generate 19.17 times less return on investment than Valeura Energy. But when comparing it to its historical volatility, Amotiv Limited is 2.69 times less risky than Valeura Energy. It trades about 0.01 of its potential returns per unit of risk. Valeura Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Valeura Energy on October 4, 2024 and sell it today you would earn a total of  468.00  from holding Valeura Energy or generate 181.4% return on investment over 90 days.

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

Amotiv Limited  vs.  Valeura Energy

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Valeura Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amotiv and Valeura Energy

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

The idea behind Amotiv Limited and Valeura Energy 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.