Correlation Between Beach Energy and Embark Education

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

By analyzing existing cross correlation between Beach Energy and Embark Education Group, you can compare the effects of market volatilities on Beach Energy and Embark Education 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 Embark Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beach Energy and Embark Education.

Diversification Opportunities for Beach Energy and Embark Education

-0.37

Correlation Coefficient

Beach Energy  Embark Education

Very good diversification

The 3 months correlation between Beach and Embark is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Beach Energy and Embark Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Education 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 Embark Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Education has no effect on the direction of Beach Energy i.e., Beach Energy and Embark Education go up and down completely randomly.

Pair Corralation between Beach Energy and Embark Education

Assuming the 90 days trading horizon Beach Energy is expected to generate 17.86 times less return on investment than Embark Education. In addition to that, Beach Energy is 1.03 times more volatile than Embark Education Group. It trades about 0.0 of its total potential returns per unit of risk. Embark Education Group is currently generating about 0.06 per unit of volatility. If you would invest  46.00  in Embark Education Group on October 4, 2024 and sell it today you would earn a total of  31.00  from holding Embark Education Group or generate 67.39% return on investment over 90 days.

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

Beach Energy  vs.  Embark Education Group

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.

Embark Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embark Education Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Embark Education 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 Embark Education

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

The idea behind Beach Energy and Embark Education Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.