Correlation Between Century Petroleum and Enwell Energy

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

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

Diversification Opportunities for Century Petroleum and Enwell Energy

0.0

Correlation Coefficient

Century Petroleum  Enwell Energy

Pay attention - limited upside

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

Pair Corralation between Century Petroleum and Enwell Energy

Given the investment horizon of 90 days Century Petroleum Corp is expected to generate 3.83 times more return on investment than Enwell Energy. However, Century Petroleum is 3.83 times more volatile than Enwell Energy plc. It trades about 0.04 of its potential returns per unit of risk. Enwell Energy plc is currently generating about 0.05 per unit of risk. If you would invest  0.01  in Century Petroleum Corp on October 5, 2024 and sell it today you would lose (0.01) from holding Century Petroleum Corp or give up 90.0% of portfolio value over 90 days.

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

Century Petroleum Corp  vs.  Enwell Energy plc

Century Petroleum Corp

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Century Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Century Petroleum is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Enwell Energy plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Century Petroleum and Enwell Energy

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

The idea behind Century Petroleum Corp and Enwell Energy 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.