Correlation Between Eco (Atlantic) and ROK Resources

Can any of the company-specific risk be diversified away by investing in both Eco (Atlantic) and ROK Resources 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 Eco (Atlantic) and ROK Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eco Oil Gas and ROK Resources, you can compare the effects of market volatilities on Eco (Atlantic) and ROK Resources 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 Eco (Atlantic) with a short position of ROK Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eco (Atlantic) and ROK Resources.

Diversification Opportunities for Eco (Atlantic) and ROK Resources

0.15

Correlation Coefficient

Eco (Atlantic)  ROK Resources

Average diversification

The 3 months correlation between Eco and ROK is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eco Oil Gas and ROK Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROK Resources and Eco (Atlantic) 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 Eco Oil Gas are associated (or correlated) with ROK Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROK Resources has no effect on the direction of Eco (Atlantic) i.e., Eco (Atlantic) and ROK Resources go up and down completely randomly.

Pair Corralation between Eco (Atlantic) and ROK Resources

Assuming the 90 days horizon Eco Oil Gas is expected to generate 1.88 times more return on investment than ROK Resources. However, Eco (Atlantic) is 1.88 times more volatile than ROK Resources. It trades about 0.02 of its potential returns per unit of risk. ROK Resources is currently generating about 0.02 per unit of risk. If you would invest  12.00  in Eco Oil Gas on December 24, 2024 and sell it today you would lose (1.00) from holding Eco Oil Gas or give up 8.33% of portfolio value over 90 days.

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

Eco Oil Gas  vs.  ROK Resources

Eco (Atlantic)

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Oil Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Eco (Atlantic) may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ROK Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROK Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, ROK Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Eco (Atlantic) and ROK Resources

The main advantage of trading using opposite Eco (Atlantic) and ROK Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco (Atlantic) position performs unexpectedly, ROK Resources 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 ROK Resources will offset losses from the drop in ROK Resources' long position.

The idea behind Eco Oil Gas and ROK Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.