Correlation Between Baselode Energy and Alligator Energy

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

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

Diversification Opportunities for Baselode Energy and Alligator Energy

0.47

Correlation Coefficient

Baselode Energy  Alligator Energy

Very weak diversification

The 3 months correlation between Baselode and Alligator is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Baselode Energy Corp and Alligator Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Energy and Baselode 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 Baselode Energy Corp are associated (or correlated) with Alligator Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Energy has no effect on the direction of Baselode Energy i.e., Baselode Energy and Alligator Energy go up and down completely randomly.

Pair Corralation between Baselode Energy and Alligator Energy

Assuming the 90 days horizon Baselode Energy Corp is expected to under-perform the Alligator Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Baselode Energy Corp is 2.29 times less risky than Alligator Energy. The otc stock trades about -0.06 of its potential returns per unit of risk. The Alligator Energy Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3.38  in Alligator Energy Limited on October 25, 2024 and sell it today you would lose (1.10) from holding Alligator Energy Limited or give up 32.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Baselode Energy Corp  vs.  Alligator Energy Limited

Baselode Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baselode Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alligator Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alligator Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Alligator Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Baselode Energy and Alligator Energy

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

The idea behind Baselode Energy Corp and Alligator Energy Limited 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..