Correlation Between Bedford Energy and Oasis Hotel

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

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

Diversification Opportunities for Bedford Energy and Oasis Hotel

1.0

Correlation Coefficient

Bedford Energy  Oasis Hotel

No risk reduction

The 3 months correlation between Bedford and Oasis is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Bedford Energy and Oasis Hotel Resort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oasis Hotel Resort and Bedford 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 Bedford Energy are associated (or correlated) with Oasis Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oasis Hotel Resort has no effect on the direction of Bedford Energy i.e., Bedford Energy and Oasis Hotel go up and down completely randomly.

Pair Corralation between Bedford Energy and Oasis Hotel

If you would invest  0.01  in Bedford Energy on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Bedford Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.4%
Values	Daily Returns

Bedford Energy  vs.  Oasis Hotel Resort

Bedford Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bedford Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Bedford Energy is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Oasis Hotel Resort

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oasis Hotel Resort has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Oasis Hotel is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bedford Energy and Oasis Hotel

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

The idea behind Bedford Energy and Oasis Hotel Resort 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.