Correlation Between Energy Services and Junee Limited

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

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

Diversification Opportunities for Energy Services and Junee Limited

-0.04

Correlation Coefficient

Energy Services  Junee Limited

Good diversification

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

Pair Corralation between Energy Services and Junee Limited

Given the investment horizon of 90 days Energy Services is expected to generate 1.62 times more return on investment than Junee Limited. However, Energy Services is 1.62 times more volatile than Junee Limited Ordinary. It trades about 0.29 of its potential returns per unit of risk. Junee Limited Ordinary is currently generating about -0.29 per unit of risk. If you would invest  1,139  in Energy Services on September 5, 2024 and sell it today you would earn a total of  300.00  from holding Energy Services or generate 26.34% return on investment over 90 days.

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

Energy Services  vs.  Junee Limited Ordinary

Energy Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Energy Services sustained solid returns over the last few months and may actually be approaching a breakup point.

Junee Limited Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Junee Limited Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Junee Limited is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Energy Services and Junee Limited

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

The idea behind Energy Services and Junee Limited Ordinary 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.