Correlation Between Helium One and Falcon Oil

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

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

Diversification Opportunities for Helium One and Falcon Oil

-0.37

Correlation Coefficient

Helium One  Falcon Oil

Very good diversification

The 3 months correlation between Helium and Falcon is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Helium One Global and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and Helium One 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 Helium One Global are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of Helium One i.e., Helium One and Falcon Oil go up and down completely randomly.

Pair Corralation between Helium One and Falcon Oil

Assuming the 90 days trading horizon Helium One is expected to generate 3.28 times less return on investment than Falcon Oil. But when comparing it to its historical volatility, Helium One Global is 1.4 times less risky than Falcon Oil. It trades about 0.05 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  445.00  in Falcon Oil Gas on December 30, 2024 and sell it today you would earn a total of  175.00  from holding Falcon Oil Gas or generate 39.33% return on investment over 90 days.

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

Helium One Global  vs.  Falcon Oil Gas

Helium One Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Helium One Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Helium One may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Falcon Oil Gas

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Oil Gas are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Falcon Oil exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Helium One and Falcon Oil

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

The idea behind Helium One Global and Falcon Oil Gas 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.