Correlation Between Black Stone and Eco (Atlantic)

Can any of the company-specific risk be diversified away by investing in both Black Stone and Eco (Atlantic) 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 Black Stone and Eco (Atlantic) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Black Stone Minerals and Eco Oil Gas, you can compare the effects of market volatilities on Black Stone and Eco (Atlantic) 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 Black Stone with a short position of Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and Eco (Atlantic).

Diversification Opportunities for Black Stone and Eco (Atlantic)

-0.47

Correlation Coefficient

Black Stone  Eco (Atlantic)

Very good diversification

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

Pair Corralation between Black Stone and Eco (Atlantic)

Considering the 90-day investment horizon Black Stone Minerals is expected to generate 0.13 times more return on investment than Eco (Atlantic). However, Black Stone Minerals is 7.94 times less risky than Eco (Atlantic). It trades about 0.05 of its potential returns per unit of risk. Eco Oil Gas is currently generating about 0.01 per unit of risk. If you would invest  1,420  in Black Stone Minerals on December 5, 2024 and sell it today you would earn a total of  32.00  from holding Black Stone Minerals or generate 2.25% return on investment over 90 days.

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

Black Stone Minerals  vs.  Eco Oil Gas

Black Stone Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Stone Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Black Stone is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Eco (Atlantic)

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Oil Gas are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eco (Atlantic) reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Stone and Eco (Atlantic)

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

The idea behind Black Stone Minerals and Eco Oil Gas 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.