Correlation Between Aquagold International and Harbour Energy

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

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

Diversification Opportunities for Aquagold International and Harbour Energy

0.62

Correlation Coefficient

Aquagold International  Harbour Energy

Poor diversification

The 3 months correlation between Aquagold and Harbour is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Harbour Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbour Energy PLC and Aquagold International 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 Aquagold International are associated (or correlated) with Harbour Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbour Energy PLC has no effect on the direction of Aquagold International i.e., Aquagold International and Harbour Energy go up and down completely randomly.

Pair Corralation between Aquagold International and Harbour Energy

Given the investment horizon of 90 days Aquagold International is expected to generate 16.53 times more return on investment than Harbour Energy. However, Aquagold International is 16.53 times more volatile than Harbour Energy PLC. It trades about 0.05 of its potential returns per unit of risk. Harbour Energy PLC is currently generating about 0.02 per unit of risk. If you would invest  24.00  in Aquagold International on October 5, 2024 and sell it today you would lose (23.96) from holding Aquagold International or give up 99.83% of portfolio value over 90 days.

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

Aquagold International  vs.  Harbour Energy PLC

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Harbour Energy PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbour Energy PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Aquagold International and Harbour Energy

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

The idea behind Aquagold International and Harbour Energy PLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.