Correlation Between Appia Energy and Standard Uranium

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

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

Diversification Opportunities for Appia Energy and Standard Uranium

0.38

Correlation Coefficient

Appia Energy  Standard Uranium

Weak diversification

The 3 months correlation between Appia and Standard is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Appia Energy Corp and Standard Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Uranium and Appia 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 Appia Energy Corp are associated (or correlated) with Standard Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Uranium has no effect on the direction of Appia Energy i.e., Appia Energy and Standard Uranium go up and down completely randomly.

Pair Corralation between Appia Energy and Standard Uranium

Assuming the 90 days horizon Appia Energy is expected to generate 2.13 times less return on investment than Standard Uranium. But when comparing it to its historical volatility, Appia Energy Corp is 1.45 times less risky than Standard Uranium. It trades about 0.07 of its potential returns per unit of risk. Standard Uranium is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.75  in Standard Uranium on December 21, 2024 and sell it today you would earn a total of  1.58  from holding Standard Uranium or generate 42.13% return on investment over 90 days.

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

Appia Energy Corp  vs.  Standard Uranium

Appia Energy Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appia Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Appia Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Standard Uranium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Uranium are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Standard Uranium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appia Energy and Standard Uranium

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

The idea behind Appia Energy Corp and Standard Uranium 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.