Correlation Between Daybreak Oil and Altura Energy

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

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

Diversification Opportunities for Daybreak Oil and Altura Energy

-0.49

Correlation Coefficient

Daybreak Oil  Altura Energy

Very good diversification

The 3 months correlation between Daybreak and Altura is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Daybreak Oil and and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura Energy and Daybreak Oil 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 Daybreak Oil and are associated (or correlated) with Altura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Energy has no effect on the direction of Daybreak Oil i.e., Daybreak Oil and Altura Energy go up and down completely randomly.

Pair Corralation between Daybreak Oil and Altura Energy

Given the investment horizon of 90 days Daybreak Oil and is expected to generate 4.85 times more return on investment than Altura Energy. However, Daybreak Oil is 4.85 times more volatile than Altura Energy. It trades about 0.06 of its potential returns per unit of risk. Altura Energy is currently generating about 0.02 per unit of risk. If you would invest  0.01  in Daybreak Oil and on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Daybreak Oil and or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Daybreak Oil and  vs.  Altura Energy

Daybreak Oil

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Daybreak Oil displayed solid returns over the last few months and may actually be approaching a breakup point.

Altura Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Altura Energy is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Daybreak Oil and Altura Energy

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

The idea behind Daybreak Oil and and Altura Energy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.