Correlation Between Arq and Tsakos Energy

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

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

Diversification Opportunities for Arq and Tsakos Energy

-0.83

Correlation Coefficient

Arq  Tsakos Energy

Pay attention - limited upside

The 3 months correlation between Arq and Tsakos is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Arq Inc and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and Arq 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 Arq Inc are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Arq i.e., Arq and Tsakos Energy go up and down completely randomly.

Pair Corralation between Arq and Tsakos Energy

Considering the 90-day investment horizon Arq Inc is expected to generate 1.41 times more return on investment than Tsakos Energy. However, Arq is 1.41 times more volatile than Tsakos Energy Navigation. It trades about 0.08 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about -0.15 per unit of risk. If you would invest  692.00  in Arq Inc on October 9, 2024 and sell it today you would earn a total of  64.00  from holding Arq Inc or generate 9.25% return on investment over 90 days.

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

Arq Inc  vs.  Tsakos Energy Navigation

Arq Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arq Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Arq reported solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Arq and Tsakos Energy

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

The idea behind Arq Inc and Tsakos Energy Navigation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.