Correlation Between Daybreak Oil and Calima Energy

Can any of the company-specific risk be diversified away by investing in both Daybreak Oil and Calima 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 Calima 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 Calima Energy Limited, you can compare the effects of market volatilities on Daybreak Oil and Calima 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 Calima Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daybreak Oil and Calima Energy.

Diversification Opportunities for Daybreak Oil and Calima Energy

0.0

Correlation Coefficient

Daybreak Oil  Calima Energy

Pay attention - limited upside

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

Pair Corralation between Daybreak Oil and Calima Energy

If you would invest  0.03  in Daybreak Oil and on December 2, 2024 and sell it today you would lose (0.01) from holding Daybreak Oil and or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.85%
Values	Daily Returns

Daybreak Oil and  vs.  Calima Energy Limited

Daybreak Oil

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Daybreak Oil and are ranked lower than 2 (%) 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.

Calima Energy Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Daybreak Oil and Calima Energy

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

The idea behind Daybreak Oil and and Calima Energy Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.