Correlation Between Imperial Petroleum and Brooge Energy

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

By analyzing existing cross correlation between Imperial Petroleum Preferred and Brooge Energy Limited, you can compare the effects of market volatilities on Imperial Petroleum and Brooge 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 Brooge Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imperial Petroleum and Brooge Energy.

Diversification Opportunities for Imperial Petroleum and Brooge Energy

0.0

Correlation Coefficient

Imperial Petroleum  Brooge Energy

Pay attention - limited upside

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

Pair Corralation between Imperial Petroleum and Brooge Energy

If you would invest  2,485  in Imperial Petroleum Preferred on November 28, 2024 and sell it today you would earn a total of  6.00  from holding Imperial Petroleum Preferred or generate 0.24% return on investment over 90 days.

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

Imperial Petroleum Preferred  vs.  Brooge Energy Limited

Imperial Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Imperial Petroleum Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Imperial Petroleum is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Brooge Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brooge Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Brooge Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Imperial Petroleum and Brooge Energy

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

The idea behind Imperial Petroleum Preferred and Brooge Energy Limited 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.