Correlation Between Indonesia Energy and PEDEVCO Corp

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

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

Diversification Opportunities for Indonesia Energy and PEDEVCO Corp

0.78

Correlation Coefficient

Indonesia Energy  PEDEVCO Corp

Poor diversification

The 3 months correlation between Indonesia and PEDEVCO is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Indonesia Energy and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and Indonesia 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 Indonesia Energy are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of Indonesia Energy i.e., Indonesia Energy and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between Indonesia Energy and PEDEVCO Corp

Given the investment horizon of 90 days Indonesia Energy is expected to generate 1.3 times more return on investment than PEDEVCO Corp. However, Indonesia Energy is 1.3 times more volatile than PEDEVCO Corp. It trades about 0.02 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about -0.04 per unit of risk. If you would invest  276.00  in Indonesia Energy on December 30, 2024 and sell it today you would earn a total of  3.00  from holding Indonesia Energy or generate 1.09% return on investment over 90 days.

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

Indonesia Energy  vs.  PEDEVCO Corp

Indonesia Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Indonesia Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Indonesia Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PEDEVCO Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PEDEVCO Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Indonesia Energy and PEDEVCO Corp

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

The idea behind Indonesia Energy and PEDEVCO 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.