Correlation Between 1st NRG and Petro Viking

Can any of the company-specific risk be diversified away by investing in both 1st NRG and Petro Viking 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 1st NRG and Petro Viking into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1st NRG Corp and Petro Viking Energy, you can compare the effects of market volatilities on 1st NRG and Petro Viking 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 1st NRG with a short position of Petro Viking. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st NRG and Petro Viking.

Diversification Opportunities for 1st NRG and Petro Viking

0.0

Correlation Coefficient

1st NRG  Petro Viking

Pay attention - limited upside

The 3 months correlation between 1st and Petro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 1st NRG Corp and Petro Viking Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Viking Energy and 1st NRG 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 1st NRG Corp are associated (or correlated) with Petro Viking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Viking Energy has no effect on the direction of 1st NRG i.e., 1st NRG and Petro Viking go up and down completely randomly.

Pair Corralation between 1st NRG and Petro Viking

If you would invest  0.38  in Petro Viking Energy on September 3, 2024 and sell it today you would lose (0.25) from holding Petro Viking Energy or give up 65.79% of portfolio value over 90 days.

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

1st NRG Corp  vs.  Petro Viking Energy

1st NRG Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1st NRG Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, 1st NRG is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Petro Viking Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Viking Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Petro Viking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 1st NRG and Petro Viking

The main advantage of trading using opposite 1st NRG and Petro Viking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st NRG position performs unexpectedly, Petro Viking 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 Petro Viking will offset losses from the drop in Petro Viking's long position.

The idea behind 1st NRG Corp and Petro Viking 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.