Correlation Between Energy Resources and Ingenia Communities

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

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

Diversification Opportunities for Energy Resources and Ingenia Communities

-0.3

Correlation Coefficient

Energy Resources  Ingenia Communities

Very good diversification

The 3 months correlation between Energy and Ingenia is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Ingenia Communities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenia Communities and Energy Resources 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 Energy Resources are associated (or correlated) with Ingenia Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenia Communities has no effect on the direction of Energy Resources i.e., Energy Resources and Ingenia Communities go up and down completely randomly.

Pair Corralation between Energy Resources and Ingenia Communities

Assuming the 90 days trading horizon Energy Resources is expected to generate 7.39 times more return on investment than Ingenia Communities. However, Energy Resources is 7.39 times more volatile than Ingenia Communities Group. It trades about 0.05 of its potential returns per unit of risk. Ingenia Communities Group is currently generating about 0.12 per unit of risk. If you would invest  0.30  in Energy Resources on December 30, 2024 and sell it today you would lose (0.10) from holding Energy Resources or give up 33.33% of portfolio value over 90 days.

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

Energy Resources  vs.  Ingenia Communities Group

Energy Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Energy Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ingenia Communities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ingenia Communities Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ingenia Communities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy Resources and Ingenia Communities

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

The idea behind Energy Resources and Ingenia Communities Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.