Correlation Between Alaska Power and Pardee Resources

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

By analyzing existing cross correlation between Alaska Power Telephone and Pardee Resources Co, you can compare the effects of market volatilities on Alaska Power and Pardee 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 Alaska Power with a short position of Pardee Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Power and Pardee Resources.

Diversification Opportunities for Alaska Power and Pardee Resources

0.23

Correlation Coefficient

Alaska Power  Pardee Resources

Modest diversification

The 3 months correlation between Alaska and Pardee is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Power Telephone and Pardee Resources Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pardee Resources and Alaska Power 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 Alaska Power Telephone are associated (or correlated) with Pardee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pardee Resources has no effect on the direction of Alaska Power i.e., Alaska Power and Pardee Resources go up and down completely randomly.

Pair Corralation between Alaska Power and Pardee Resources

Given the investment horizon of 90 days Alaska Power is expected to generate 2.32 times less return on investment than Pardee Resources. But when comparing it to its historical volatility, Alaska Power Telephone is 1.39 times less risky than Pardee Resources. It trades about 0.06 of its potential returns per unit of risk. Pardee Resources Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  31,355  in Pardee Resources Co on December 28, 2024 and sell it today you would earn a total of  2,645  from holding Pardee Resources Co or generate 8.44% return on investment over 90 days.

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

Alaska Power Telephone  vs.  Pardee Resources Co

Alaska Power Telephone

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Power Telephone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Alaska Power is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pardee Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Pardee Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alaska Power and Pardee Resources

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

The idea behind Alaska Power Telephone and Pardee Resources Co 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.