Correlation Between Altura Energy and San Juan

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

By analyzing existing cross correlation between Altura Energy and San Juan Basin, you can compare the effects of market volatilities on Altura Energy and San Juan 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 San Juan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altura Energy and San Juan.

Diversification Opportunities for Altura Energy and San Juan

0.12

Correlation Coefficient

Altura Energy  San Juan

Average diversification

The 3 months correlation between Altura and San is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Altura Energy and San Juan Basin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Juan Basin 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 San Juan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Juan Basin has no effect on the direction of Altura Energy i.e., Altura Energy and San Juan go up and down completely randomly.

Pair Corralation between Altura Energy and San Juan

Assuming the 90 days horizon Altura Energy is expected to generate 1.9 times more return on investment than San Juan. However, Altura Energy is 1.9 times more volatile than San Juan Basin. It trades about 0.09 of its potential returns per unit of risk. San Juan Basin is currently generating about -0.05 per unit of risk. If you would invest  181.00  in Altura Energy on October 12, 2024 and sell it today you would earn a total of  779.00  from holding Altura Energy or generate 430.39% return on investment over 90 days.

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

Altura Energy  vs.  San Juan Basin

Altura Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Altura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

San Juan Basin

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Juan Basin are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking indicators, San Juan is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Altura Energy and San Juan

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

The idea behind Altura Energy and San Juan Basin 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.