Correlation Between Morien Resources and Valeura Energy

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

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

Diversification Opportunities for Morien Resources and Valeura Energy

-0.79

Correlation Coefficient

Morien Resources  Valeura Energy

Pay attention - limited upside

The 3 months correlation between Morien and Valeura is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Morien Resources Corp and Valeura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valeura Energy and Morien Resources 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 Morien Resources Corp are associated (or correlated) with Valeura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valeura Energy has no effect on the direction of Morien Resources i.e., Morien Resources and Valeura Energy go up and down completely randomly.

Pair Corralation between Morien Resources and Valeura Energy

Assuming the 90 days horizon Morien Resources Corp is expected to under-perform the Valeura Energy. In addition to that, Morien Resources is 1.63 times more volatile than Valeura Energy. It trades about -0.02 of its total potential returns per unit of risk. Valeura Energy is currently generating about 0.14 per unit of volatility. If you would invest  426.00  in Valeura Energy on October 4, 2024 and sell it today you would earn a total of  300.00  from holding Valeura Energy or generate 70.42% return on investment over 90 days.

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

Morien Resources Corp  vs.  Valeura Energy

Morien Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morien Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Valeura Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morien Resources and Valeura Energy

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

The idea behind Morien Resources Corp and Valeura 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.