Correlation Between Carlton Investments and Beach Energy

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

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

Diversification Opportunities for Carlton Investments and Beach Energy

0.27

Correlation Coefficient

Carlton Investments  Beach Energy

Modest diversification

The 3 months correlation between Carlton and Beach is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Beach Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beach Energy and Carlton Investments 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 Carlton Investments are associated (or correlated) with Beach Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beach Energy has no effect on the direction of Carlton Investments i.e., Carlton Investments and Beach Energy go up and down completely randomly.

Pair Corralation between Carlton Investments and Beach Energy

Assuming the 90 days trading horizon Carlton Investments is expected to generate 0.39 times more return on investment than Beach Energy. However, Carlton Investments is 2.58 times less risky than Beach Energy. It trades about 0.03 of its potential returns per unit of risk. Beach Energy is currently generating about -0.01 per unit of risk. If you would invest  2,821  in Carlton Investments on October 4, 2024 and sell it today you would earn a total of  194.00  from holding Carlton Investments or generate 6.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

Carlton Investments  vs.  Beach Energy

Carlton Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Carlton Investments and Beach Energy

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

The idea behind Carlton Investments and Beach Energy 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.