Correlation Between Empire Petroleum and Crown LNG

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

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

Diversification Opportunities for Empire Petroleum and Crown LNG

-0.04

Correlation Coefficient

Empire Petroleum  Crown LNG

Good diversification

The 3 months correlation between Empire and Crown is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and Crown LNG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown LNG Holdings and Empire 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 Empire Petroleum Corp are associated (or correlated) with Crown LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown LNG Holdings has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and Crown LNG go up and down completely randomly.

Pair Corralation between Empire Petroleum and Crown LNG

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the Crown LNG. But the stock apears to be less risky and, when comparing its historical volatility, Empire Petroleum Corp is 4.77 times less risky than Crown LNG. The stock trades about -0.04 of its potential returns per unit of risk. The Crown LNG Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Crown LNG Holdings on December 28, 2024 and sell it today you would earn a total of  0.99  from holding Crown LNG Holdings or generate 33.0% return on investment over 90 days.

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

Empire Petroleum Corp  vs.  Crown LNG Holdings

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Crown LNG Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown LNG Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Crown LNG showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire Petroleum and Crown LNG

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

The idea behind Empire Petroleum Corp and Crown LNG Holdings 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.