Correlation Between WESTERN AREAS and WESTERN ENERGY

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

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

Diversification Opportunities for WESTERN AREAS and WESTERN ENERGY

0.0

Correlation Coefficient

WESTERN AREAS  WESTERN ENERGY

Pay attention - limited upside

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

Pair Corralation between WESTERN AREAS and WESTERN ENERGY

If you would invest (100.00) in WESTERN AREAS on December 21, 2024 and sell it today you would earn a total of  100.00  from holding WESTERN AREAS or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

WESTERN AREAS  vs.  WESTERN ENERGY SRV

WESTERN AREAS

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESTERN AREAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESTERN AREAS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WESTERN ENERGY SRV

Risk-Adjusted Performance

Very Weak

Over the last 90 days WESTERN ENERGY SRV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with WESTERN AREAS and WESTERN ENERGY

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

The idea behind WESTERN AREAS and WESTERN ENERGY SRV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.