Correlation Between Gear Energy and Coelacanth Energy

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

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

Diversification Opportunities for Gear Energy and Coelacanth Energy

0.89

Correlation Coefficient

Gear Energy  Coelacanth Energy

Very poor diversification

The 3 months correlation between Gear and Coelacanth is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gear Energy and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy and Gear Energy 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 Gear Energy are associated (or correlated) with Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of Gear Energy i.e., Gear Energy and Coelacanth Energy go up and down completely randomly.

Pair Corralation between Gear Energy and Coelacanth Energy

Assuming the 90 days horizon Gear Energy is expected to under-perform the Coelacanth Energy. In addition to that, Gear Energy is 1.32 times more volatile than Coelacanth Energy. It trades about -0.1 of its total potential returns per unit of risk. Coelacanth Energy is currently generating about -0.11 per unit of volatility. If you would invest  61.00  in Coelacanth Energy on September 3, 2024 and sell it today you would lose (8.00) from holding Coelacanth Energy or give up 13.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Gear Energy  vs.  Coelacanth Energy

Gear Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gear Energy 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Coelacanth Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gear Energy and Coelacanth Energy

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

The idea behind Gear Energy and Coelacanth 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.