Correlation Between Liberty Energy and Cheetah Oil

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

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

Diversification Opportunities for Liberty Energy and Cheetah Oil

-0.02

Correlation Coefficient

Liberty Energy  Cheetah Oil

Good diversification

The 3 months correlation between Liberty and Cheetah is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Energy Corp and Cheetah Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheetah Oil Gas and Liberty 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 Liberty Energy Corp are associated (or correlated) with Cheetah Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheetah Oil Gas has no effect on the direction of Liberty Energy i.e., Liberty Energy and Cheetah Oil go up and down completely randomly.

Pair Corralation between Liberty Energy and Cheetah Oil

Given the investment horizon of 90 days Liberty Energy is expected to generate 1.05 times less return on investment than Cheetah Oil. But when comparing it to its historical volatility, Liberty Energy Corp is 1.02 times less risky than Cheetah Oil. It trades about 0.04 of its potential returns per unit of risk. Cheetah Oil Gas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Cheetah Oil Gas on October 3, 2024 and sell it today you would lose (0.01) from holding Cheetah Oil Gas or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Liberty Energy Corp  vs.  Cheetah Oil Gas

Liberty Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Liberty Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cheetah Oil Gas

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheetah Oil Gas are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Cheetah Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Energy and Cheetah Oil

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

The idea behind Liberty Energy Corp and Cheetah Oil Gas 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.