Correlation Between Beach Energy and A1 Investments

Can any of the company-specific risk be diversified away by investing in both Beach Energy and A1 Investments 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 Beach Energy and A1 Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Beach Energy and A1 Investments Resources, you can compare the effects of market volatilities on Beach Energy and A1 Investments 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 Beach Energy with a short position of A1 Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beach Energy and A1 Investments.

Diversification Opportunities for Beach Energy and A1 Investments

0.0

Correlation Coefficient

Beach Energy  A1 Investments

Pay attention - limited upside

The 3 months correlation between Beach and AYI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Beach Energy and A1 Investments Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Investments Resources and Beach 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 Beach Energy are associated (or correlated) with A1 Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Investments Resources has no effect on the direction of Beach Energy i.e., Beach Energy and A1 Investments go up and down completely randomly.

Pair Corralation between Beach Energy and A1 Investments

Assuming the 90 days trading horizon Beach Energy is expected to generate 14.31 times less return on investment than A1 Investments. But when comparing it to its historical volatility, Beach Energy is 2.32 times less risky than A1 Investments. It trades about 0.0 of its potential returns per unit of risk. A1 Investments Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.10  in A1 Investments Resources on October 4, 2024 and sell it today you would earn a total of  0.00  from holding A1 Investments Resources or generate 0.0% return on investment over 90 days.

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

Beach Energy  vs.  A1 Investments Resources

Beach Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beach Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Beach Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

A1 Investments Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1 Investments Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, A1 Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Beach Energy and A1 Investments

The main advantage of trading using opposite Beach Energy and A1 Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beach Energy position performs unexpectedly, A1 Investments 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 A1 Investments will offset losses from the drop in A1 Investments' long position.

The idea behind Beach Energy and A1 Investments Resources 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.