Correlation Between FAR and Tamarack Valley

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

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

Diversification Opportunities for FAR and Tamarack Valley

-0.12

Correlation Coefficient

FAR  Tamarack Valley

Good diversification

The 3 months correlation between FAR and Tamarack is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding FAR Limited and Tamarack Valley Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamarack Valley Energy and FAR 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 FAR Limited are associated (or correlated) with Tamarack Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamarack Valley Energy has no effect on the direction of FAR i.e., FAR and Tamarack Valley go up and down completely randomly.

Pair Corralation between FAR and Tamarack Valley

Assuming the 90 days horizon FAR Limited is expected to generate 0.63 times more return on investment than Tamarack Valley. However, FAR Limited is 1.58 times less risky than Tamarack Valley. It trades about 0.09 of its potential returns per unit of risk. Tamarack Valley Energy is currently generating about -0.05 per unit of risk. If you would invest  31.00  in FAR Limited on December 28, 2024 and sell it today you would earn a total of  2.00  from holding FAR Limited or generate 6.45% return on investment over 90 days.

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

FAR Limited  vs.  Tamarack Valley Energy

FAR Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FAR Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FAR may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tamarack Valley Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tamarack Valley Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Tamarack Valley is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FAR and Tamarack Valley

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

The idea behind FAR Limited and Tamarack Valley Energy 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.