Correlation Between Kiwetinohk Energy and Buru Energy

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

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

Diversification Opportunities for Kiwetinohk Energy and Buru Energy

0.23

Correlation Coefficient

Kiwetinohk Energy  Buru Energy

Modest diversification

The 3 months correlation between Kiwetinohk and Buru is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kiwetinohk Energy Corp and Buru Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buru Energy Limited and Kiwetinohk 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 Kiwetinohk Energy Corp are associated (or correlated) with Buru Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buru Energy Limited has no effect on the direction of Kiwetinohk Energy i.e., Kiwetinohk Energy and Buru Energy go up and down completely randomly.

Pair Corralation between Kiwetinohk Energy and Buru Energy

Assuming the 90 days horizon Kiwetinohk Energy Corp is expected to under-perform the Buru Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Kiwetinohk Energy Corp is 10.19 times less risky than Buru Energy. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Buru Energy Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Buru Energy Limited on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Buru Energy Limited or generate 0.0% return on investment over 90 days.

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

Kiwetinohk Energy Corp  vs.  Buru Energy Limited

Kiwetinohk Energy Corp

Risk-Adjusted Performance

Very Weak

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

Buru Energy Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Buru Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Buru Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kiwetinohk Energy and Buru Energy

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

The idea behind Kiwetinohk Energy Corp and Buru 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.