Correlation Between BPI Energy and Century Petroleum

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

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

Diversification Opportunities for BPI Energy and Century Petroleum

0.0

Correlation Coefficient

BPI Energy  Century Petroleum

Pay attention - limited upside

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

Pair Corralation between BPI Energy and Century Petroleum

If you would invest  0.01  in BPI Energy Holdings on September 3, 2024 and sell it today you would earn a total of  0.00  from holding BPI Energy Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.44%
Values	Daily Returns

BPI Energy Holdings  vs.  Century Petroleum Corp

BPI Energy Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BPI Energy Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, BPI Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Century Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BPI Energy and Century Petroleum

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

The idea behind BPI Energy Holdings and Century Petroleum Corp 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 Stocks Directory module to find actively traded stocks across global markets.