Correlation Between New Frontier and PetroShale

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

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

Diversification Opportunities for New Frontier and PetroShale

0.0

Correlation Coefficient

New Frontier  PetroShale

Pay attention - limited upside

The 3 months correlation between New and PetroShale is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Frontier Energy and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and New Frontier 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 New Frontier Energy are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of New Frontier i.e., New Frontier and PetroShale go up and down completely randomly.

Pair Corralation between New Frontier and PetroShale

If you would invest  0.01  in New Frontier Energy on October 11, 2024 and sell it today you would earn a total of  0.00  from holding New Frontier Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

New Frontier Energy  vs.  PetroShale

New Frontier Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Frontier Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, New Frontier is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

PetroShale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroShale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with New Frontier and PetroShale

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

The idea behind New Frontier Energy and PetroShale 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.