Correlation Between Journey Energy and 88 Energy

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

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

Diversification Opportunities for Journey Energy and 88 Energy

0.47

Correlation Coefficient

Journey Energy  88 Energy

Very weak diversification

The 3 months correlation between Journey and EEENF is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Journey Energy and 88 Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 88 Energy Limited and Journey 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 Journey Energy 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 Limited has no effect on the direction of Journey Energy i.e., Journey Energy and 88 Energy go up and down completely randomly.

Pair Corralation between Journey Energy and 88 Energy

Assuming the 90 days horizon Journey Energy is expected to under-perform the 88 Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, Journey Energy is 2.47 times less risky than 88 Energy. The otc stock trades about -0.18 of its potential returns per unit of risk. The 88 Energy Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  0.14  in 88 Energy Limited on September 18, 2024 and sell it today you would lose (0.02) from holding 88 Energy Limited or give up 14.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Journey Energy  vs.  88 Energy Limited

Journey Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Journey Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

88 Energy Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 88 Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, 88 Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Journey Energy and 88 Energy

The main advantage of trading using opposite Journey Energy and 88 Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Journey Energy 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 Journey Energy and 88 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.