Correlation Between Calima Energy and PetroShale

Can any of the company-specific risk be diversified away by investing in both Calima Energy and PetroShale 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 PetroShale 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 PetroShale, you can compare the effects of market volatilities on Calima Energy and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Calima Energy and PetroShale.

Diversification Opportunities for Calima Energy and PetroShale

0.0

Correlation Coefficient

Calima Energy  PetroShale

Pay attention - limited upside

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

Pair Corralation between Calima Energy and PetroShale

If you would invest  1.25  in Calima Energy Limited on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Calima Energy Limited or generate 0.0% return on investment over 90 days.

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

Calima Energy Limited  vs.  PetroShale

Calima Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calima Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Calima Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PetroShale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroShale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Calima Energy and PetroShale

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

The idea behind Calima Energy Limited and PetroShale 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.