Correlation Between MEG Energy and Total Helium

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

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

Diversification Opportunities for MEG Energy and Total Helium

0.13

Correlation Coefficient

MEG Energy  Total Helium

Average diversification

The 3 months correlation between MEG and Total is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding MEG Energy Corp and Total Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Helium and MEG 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 MEG Energy Corp are associated (or correlated) with Total Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Helium has no effect on the direction of MEG Energy i.e., MEG Energy and Total Helium go up and down completely randomly.

Pair Corralation between MEG Energy and Total Helium

Assuming the 90 days horizon MEG Energy Corp is expected to under-perform the Total Helium. But the pink sheet apears to be less risky and, when comparing its historical volatility, MEG Energy Corp is 7.75 times less risky than Total Helium. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Total Helium is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.44  in Total Helium on August 31, 2024 and sell it today you would lose (0.25) from holding Total Helium or give up 17.36% of portfolio value over 90 days.

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

MEG Energy Corp  vs.  Total Helium

MEG Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Total Helium

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with MEG Energy and Total Helium

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

The idea behind MEG Energy Corp and Total Helium 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.