Correlation Between Altus Property and Basic Energy

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

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

Diversification Opportunities for Altus Property and Basic Energy

-0.31

Correlation Coefficient

Altus Property  Basic Energy

Very good diversification

The 3 months correlation between Altus and Basic is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Altus Property Ventures and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy Corp and Altus Property 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 Altus Property Ventures are associated (or correlated) with Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of Altus Property i.e., Altus Property and Basic Energy go up and down completely randomly.

Pair Corralation between Altus Property and Basic Energy

Assuming the 90 days trading horizon Altus Property Ventures is expected to under-perform the Basic Energy. But the stock apears to be less risky and, when comparing its historical volatility, Altus Property Ventures is 1.54 times less risky than Basic Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Basic Energy Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Basic Energy Corp on December 22, 2024 and sell it today you would lose (1.00) from holding Basic Energy Corp or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.27%
Values	Daily Returns

Altus Property Ventures  vs.  Basic Energy Corp

Altus Property Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Altus Property Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Altus Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Basic Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Basic Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Basic Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Altus Property and Basic Energy

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

The idea behind Altus Property Ventures and Basic Energy Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.