Correlation Between FEC Resources and Valeura Energy

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

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

Diversification Opportunities for FEC Resources and Valeura Energy

-0.31

Correlation Coefficient

FEC Resources  Valeura Energy

Very good diversification

The 3 months correlation between FEC and Valeura is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FEC Resources and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and FEC 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 FEC Resources are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of FEC Resources i.e., FEC Resources and Valeura Energy go up and down completely randomly.

Pair Corralation between FEC Resources and Valeura Energy

Assuming the 90 days horizon FEC Resources is expected to generate 1.55 times less return on investment than Valeura Energy. In addition to that, FEC Resources is 3.19 times more volatile than Valeura Energy. It trades about 0.02 of its total potential returns per unit of risk. Valeura Energy is currently generating about 0.1 per unit of volatility. If you would invest  474.00  in Valeura Energy on December 25, 2024 and sell it today you would earn a total of  78.00  from holding Valeura Energy or generate 16.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.72%
Values	Daily Returns

FEC Resources  vs.  Valeura Energy

FEC Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FEC Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FEC Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Valeura Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FEC Resources and Valeura Energy

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

The idea behind FEC Resources and Valeura 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.