Correlation Between Falcon Oil and Pets At

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

By analyzing existing cross correlation between Falcon Oil Gas and Pets at Home, you can compare the effects of market volatilities on Falcon Oil and Pets At 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 Falcon Oil with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Oil and Pets At.

Diversification Opportunities for Falcon Oil and Pets At

0.74

Correlation Coefficient

Falcon Oil  Pets At

Poor diversification

The 3 months correlation between Falcon and Pets is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Oil Gas and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and Falcon Oil 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 Falcon Oil Gas are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Falcon Oil i.e., Falcon Oil and Pets At go up and down completely randomly.

Pair Corralation between Falcon Oil and Pets At

Assuming the 90 days trading horizon Falcon Oil Gas is expected to generate 0.91 times more return on investment than Pets At. However, Falcon Oil Gas is 1.1 times less risky than Pets At. It trades about 0.03 of its potential returns per unit of risk. Pets at Home is currently generating about -0.28 per unit of risk. If you would invest  450.00  in Falcon Oil Gas on October 6, 2024 and sell it today you would earn a total of  10.00  from holding Falcon Oil Gas or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Falcon Oil Gas  vs.  Pets at Home

Falcon Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Falcon Oil is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pets at Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pets at Home 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Falcon Oil and Pets At

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

The idea behind Falcon Oil Gas and Pets at Home 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.