Correlation Between Flexible Solutions and Paiute Oil

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

By analyzing existing cross correlation between Flexible Solutions International and Paiute Oil Mining, you can compare the effects of market volatilities on Flexible Solutions and Paiute Oil 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 Flexible Solutions with a short position of Paiute Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flexible Solutions and Paiute Oil.

Diversification Opportunities for Flexible Solutions and Paiute Oil

0.0

Correlation Coefficient

Flexible Solutions  Paiute Oil

Pay attention - limited upside

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

Pair Corralation between Flexible Solutions and Paiute Oil

Considering the 90-day investment horizon Flexible Solutions is expected to generate 46.38 times less return on investment than Paiute Oil. But when comparing it to its historical volatility, Flexible Solutions International is 20.09 times less risky than Paiute Oil. It trades about 0.03 of its potential returns per unit of risk. Paiute Oil Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Paiute Oil Mining on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Paiute Oil Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	86.06%
Values	Daily Returns

Flexible Solutions Internation  vs.  Paiute Oil Mining

Flexible Solutions

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flexible Solutions International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Flexible Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Paiute Oil Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paiute Oil Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Paiute Oil is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Flexible Solutions and Paiute Oil

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

The idea behind Flexible Solutions International and Paiute Oil Mining 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .