Correlation Between Energy Resources and Tigers Realm

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

By analyzing existing cross correlation between Energy Resources and Tigers Realm Coal, you can compare the effects of market volatilities on Energy Resources and Tigers Realm 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 Tigers Realm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Resources and Tigers Realm.

Diversification Opportunities for Energy Resources and Tigers Realm

0.41

Correlation Coefficient

Energy Resources  Tigers Realm

Very weak diversification

The 3 months correlation between Energy and Tigers is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Energy Resources and Tigers Realm Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigers Realm Coal 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 Tigers Realm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigers Realm Coal has no effect on the direction of Energy Resources i.e., Energy Resources and Tigers Realm go up and down completely randomly.

Pair Corralation between Energy Resources and Tigers Realm

Assuming the 90 days trading horizon Energy Resources is expected to generate 3.03 times more return on investment than Tigers Realm. However, Energy Resources is 3.03 times more volatile than Tigers Realm Coal. It trades about 0.2 of its potential returns per unit of risk. Tigers Realm Coal is currently generating about -0.11 per unit of risk. If you would invest  0.20  in Energy Resources on September 21, 2024 and sell it today you would earn a total of  0.10  from holding Energy Resources or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Energy Resources  vs.  Tigers Realm Coal

Energy Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Resources are ranked lower than 7 (%) 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.

Tigers Realm Coal

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Tigers Realm Coal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Energy Resources and Tigers Realm

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

The idea behind Energy Resources and Tigers Realm Coal 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.