Correlation Between Imperial Petroleum and Mirage Energy

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

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

Diversification Opportunities for Imperial Petroleum and Mirage Energy

-0.06

Correlation Coefficient

Imperial Petroleum  Mirage Energy

Good diversification

The 3 months correlation between Imperial and Mirage is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Imperial Petroleum and Mirage Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirage Energy Corp and Imperial Petroleum 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 Imperial Petroleum are associated (or correlated) with Mirage Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirage Energy Corp has no effect on the direction of Imperial Petroleum i.e., Imperial Petroleum and Mirage Energy go up and down completely randomly.

Pair Corralation between Imperial Petroleum and Mirage Energy

Given the investment horizon of 90 days Imperial Petroleum is expected to generate 38.5 times less return on investment than Mirage Energy. But when comparing it to its historical volatility, Imperial Petroleum is 23.77 times less risky than Mirage Energy. It trades about 0.07 of its potential returns per unit of risk. Mirage Energy Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3.40  in Mirage Energy Corp on October 5, 2024 and sell it today you would lose (2.80) from holding Mirage Energy Corp or give up 82.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Imperial Petroleum  vs.  Mirage Energy Corp

Imperial Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Mirage Energy Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirage Energy Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Mirage Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Imperial Petroleum and Mirage Energy

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

The idea behind Imperial Petroleum and Mirage Energy 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.