Correlation Between Blue Dolphin and PrimeEnergy

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

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

Diversification Opportunities for Blue Dolphin and PrimeEnergy

0.0

Correlation Coefficient

Blue Dolphin  PrimeEnergy

Pay attention - limited upside

The 3 months correlation between Blue and PrimeEnergy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blue Dolphin Energy and PrimeEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PrimeEnergy and Blue Dolphin 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 Blue Dolphin Energy are associated (or correlated) with PrimeEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PrimeEnergy has no effect on the direction of Blue Dolphin i.e., Blue Dolphin and PrimeEnergy go up and down completely randomly.

Pair Corralation between Blue Dolphin and PrimeEnergy

If you would invest  22,389  in PrimeEnergy on December 30, 2024 and sell it today you would earn a total of  17.00  from holding PrimeEnergy or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Blue Dolphin Energy  vs.  PrimeEnergy

Blue Dolphin Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blue Dolphin Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Blue Dolphin is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PrimeEnergy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PrimeEnergy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PrimeEnergy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blue Dolphin and PrimeEnergy

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

The idea behind Blue Dolphin Energy and PrimeEnergy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.