Correlation Between Corre Energy and Cairn Homes

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

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

Diversification Opportunities for Corre Energy and Cairn Homes

0.26

Correlation Coefficient

Corre Energy  Cairn Homes

Modest diversification

The 3 months correlation between Corre and Cairn is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Corre Energy BV and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC and Corre 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 Corre Energy BV are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Corre Energy i.e., Corre Energy and Cairn Homes go up and down completely randomly.

Pair Corralation between Corre Energy and Cairn Homes

Assuming the 90 days trading horizon Corre Energy BV is expected to generate 8.37 times more return on investment than Cairn Homes. However, Corre Energy is 8.37 times more volatile than Cairn Homes PLC. It trades about 0.04 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.16 per unit of risk. If you would invest  11.00  in Corre Energy BV on December 30, 2024 and sell it today you would lose (2.50) from holding Corre Energy BV or give up 22.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Corre Energy BV  vs.  Cairn Homes PLC

Corre Energy BV

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corre Energy BV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Corre Energy demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Cairn Homes PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cairn Homes PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Corre Energy and Cairn Homes

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

The idea behind Corre Energy BV and Cairn Homes PLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.