Correlation Between Calima Energy and New Source

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

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

Diversification Opportunities for Calima Energy and New Source

0.0

Correlation Coefficient

Calima Energy  New Source

Pay attention - limited upside

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

Pair Corralation between Calima Energy and New Source

If you would invest  1.00  in Calima Energy Limited on September 5, 2024 and sell it today you would earn a total of  0.25  from holding Calima Energy Limited or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Calima Energy Limited  vs.  New Source Energy

Calima Energy Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Calima Energy Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Calima Energy reported solid returns over the last few months and may actually be approaching a breakup point.

New Source Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Source Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Source is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Calima Energy and New Source

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

The idea behind Calima Energy Limited and New Source 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.