Correlation Between Highpeak Energy and Battalion Oil

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Can any of the company-specific risk be diversified away by investing in both Highpeak Energy and Battalion 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 Highpeak Energy and Battalion Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highpeak Energy Acquisition and Battalion Oil Corp, you can compare the effects of market volatilities on Highpeak Energy and Battalion 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 Highpeak Energy with a short position of Battalion Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highpeak Energy and Battalion Oil.

Diversification Opportunities for Highpeak Energy and Battalion Oil

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Highpeak and Battalion is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Highpeak Energy Acquisition and Battalion Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Battalion Oil Corp and Highpeak 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 Highpeak Energy Acquisition are associated (or correlated) with Battalion Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Battalion Oil Corp has no effect on the direction of Highpeak Energy i.e., Highpeak Energy and Battalion Oil go up and down completely randomly.

Pair Corralation between Highpeak Energy and Battalion Oil

Considering the 90-day investment horizon Highpeak Energy is expected to generate 17.15 times less return on investment than Battalion Oil. But when comparing it to its historical volatility, Highpeak Energy Acquisition is 5.65 times less risky than Battalion Oil. It trades about 0.02 of its potential returns per unit of risk. Battalion Oil Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Battalion Oil Corp on September 12, 2024 and sell it today you would earn a total of  36.00  from holding Battalion Oil Corp or generate 12.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Highpeak Energy Acquisition  vs.  Battalion Oil Corp

 Performance 
       Timeline  
Highpeak Energy Acqu 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Highpeak Energy Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Highpeak Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Battalion Oil Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Battalion Oil Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Battalion Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Highpeak Energy and Battalion Oil Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Highpeak Energy and Battalion Oil

The main advantage of trading using opposite Highpeak Energy and Battalion Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highpeak Energy position performs unexpectedly, Battalion 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 Battalion Oil will offset losses from the drop in Battalion Oil's long position.
The idea behind Highpeak Energy Acquisition and Battalion Oil Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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