Correlation Between Canacol Energy and Orca Energy

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

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

Diversification Opportunities for Canacol Energy and Orca Energy

0.37

Correlation Coefficient

Canacol Energy  Orca Energy

Weak diversification

The 3 months correlation between Canacol and Orca is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Canacol Energy and Orca Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca Energy Group and Canacol 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 Canacol Energy are associated (or correlated) with Orca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca Energy Group has no effect on the direction of Canacol Energy i.e., Canacol Energy and Orca Energy go up and down completely randomly.

Pair Corralation between Canacol Energy and Orca Energy

Assuming the 90 days trading horizon Canacol Energy is expected to generate 1.22 times more return on investment than Orca Energy. However, Canacol Energy is 1.22 times more volatile than Orca Energy Group. It trades about 0.07 of its potential returns per unit of risk. Orca Energy Group is currently generating about -0.05 per unit of risk. If you would invest  336.00  in Canacol Energy on September 15, 2024 and sell it today you would earn a total of  42.00  from holding Canacol Energy or generate 12.5% return on investment over 90 days.

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

Canacol Energy  vs.  Orca Energy Group

Canacol Energy

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canacol Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Canacol Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Orca Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orca Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Canacol Energy and Orca Energy

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

The idea behind Canacol Energy and Orca Energy Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.