Correlation Between Investment and 88 Energy

Can any of the company-specific risk be diversified away by investing in both Investment and 88 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 Investment and 88 Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Investment and 88 Energy, you can compare the effects of market volatilities on Investment and 88 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 Investment with a short position of 88 Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and 88 Energy.

Diversification Opportunities for Investment and 88 Energy

0.34

Correlation Coefficient

Investment  88 Energy

Weak diversification

The 3 months correlation between Investment and 88E is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and 88 Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy and Investment 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 The Investment are associated (or correlated) with 88 Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 88 Energy has no effect on the direction of Investment i.e., Investment and 88 Energy go up and down completely randomly.

Pair Corralation between Investment and 88 Energy

Assuming the 90 days trading horizon The Investment is expected to generate 0.25 times more return on investment than 88 Energy. However, The Investment is 3.99 times less risky than 88 Energy. It trades about -0.05 of its potential returns per unit of risk. 88 Energy is currently generating about -0.15 per unit of risk. If you would invest  37,000  in The Investment on October 22, 2024 and sell it today you would lose (600.00) from holding The Investment or give up 1.62% of portfolio value over 90 days.

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

The Investment  vs.  88 Energy

Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Investment is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

88 Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Investment and 88 Energy

The main advantage of trading using opposite Investment and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, 88 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 88 Energy will offset losses from the drop in 88 Energy's long position.

The idea behind The Investment and 88 Energy 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.