Correlation Between Converge Information and PXP Energy

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

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

Diversification Opportunities for Converge Information and PXP Energy

-0.35

Correlation Coefficient

Converge Information  PXP Energy

Very good diversification

The 3 months correlation between Converge and PXP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Converge Information Communica and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp and Converge Information 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 Converge Information Communications are associated (or correlated) with PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of Converge Information i.e., Converge Information and PXP Energy go up and down completely randomly.

Pair Corralation between Converge Information and PXP Energy

Assuming the 90 days trading horizon Converge Information Communications is expected to generate 0.55 times more return on investment than PXP Energy. However, Converge Information Communications is 1.81 times less risky than PXP Energy. It trades about 0.29 of its potential returns per unit of risk. PXP Energy Corp is currently generating about 0.0 per unit of risk. If you would invest  1,628  in Converge Information Communications on October 25, 2024 and sell it today you would earn a total of  162.00  from holding Converge Information Communications or generate 9.95% return on investment over 90 days.

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

Converge Information Communica  vs.  PXP Energy Corp

Converge Information

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Converge Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PXP Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PXP Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Converge Information and PXP Energy

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

The idea behind Converge Information Communications and PXP Energy Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.