Correlation Between E Split and ProAm Explorations

Can any of the company-specific risk be diversified away by investing in both E Split and ProAm Explorations 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 E Split and ProAm Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E Split Corp and ProAm Explorations Corp, you can compare the effects of market volatilities on E Split and ProAm Explorations 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 E Split with a short position of ProAm Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Split and ProAm Explorations.

Diversification Opportunities for E Split and ProAm Explorations

-0.61

Correlation Coefficient

E Split  ProAm Explorations

Excellent diversification

The 3 months correlation between ENS-PA and ProAm is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding E Split Corp and ProAm Explorations Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProAm Explorations Corp and E Split 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 E Split Corp are associated (or correlated) with ProAm Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProAm Explorations Corp has no effect on the direction of E Split i.e., E Split and ProAm Explorations go up and down completely randomly.

Pair Corralation between E Split and ProAm Explorations

Assuming the 90 days trading horizon E Split is expected to generate 16.22 times less return on investment than ProAm Explorations. But when comparing it to its historical volatility, E Split Corp is 33.29 times less risky than ProAm Explorations. It trades about 0.1 of its potential returns per unit of risk. ProAm Explorations Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  10.00  in ProAm Explorations Corp on October 11, 2024 and sell it today you would lose (7.00) from holding ProAm Explorations Corp or give up 70.0% of portfolio value over 90 days.

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

E Split Corp  vs.  ProAm Explorations Corp

E Split Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in E Split Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, E Split may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ProAm Explorations Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProAm Explorations Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with E Split and ProAm Explorations

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

The idea behind E Split Corp and ProAm Explorations Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..