Correlation Between Altura Energy and Daybreak Oil

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

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

Diversification Opportunities for Altura Energy and Daybreak Oil

-0.5

Correlation Coefficient

Altura Energy  Daybreak Oil

Very good diversification

The 3 months correlation between Altura and Daybreak is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and Daybreak Oil and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daybreak Oil and Altura 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 Altura Energy are associated (or correlated) with Daybreak Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daybreak Oil has no effect on the direction of Altura Energy i.e., Altura Energy and Daybreak Oil go up and down completely randomly.

Pair Corralation between Altura Energy and Daybreak Oil

Assuming the 90 days horizon Altura Energy is expected to generate 9.97 times less return on investment than Daybreak Oil. But when comparing it to its historical volatility, Altura Energy is 4.89 times less risky than Daybreak Oil. It trades about 0.03 of its potential returns per unit of risk. Daybreak Oil and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Daybreak Oil and on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Daybreak Oil and or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Altura Energy  vs.  Daybreak Oil and

Altura Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Altura Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Daybreak Oil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Daybreak Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altura Energy and Daybreak Oil

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

The idea behind Altura Energy and Daybreak Oil and 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.