Correlation Between New Source and Altura Energy

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

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

Diversification Opportunities for New Source and Altura Energy

0.0

Correlation Coefficient

New Source  Altura Energy

Pay attention - limited upside

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

Pair Corralation between New Source and Altura Energy

If you would invest  925.00  in Altura Energy on December 27, 2024 and sell it today you would lose (11.00) from holding Altura Energy or give up 1.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

New Source Energy  vs.  Altura Energy

New Source Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Source Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Source is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Altura Energy

Risk-Adjusted Performance

Weak

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

Pair Trading with New Source and Altura Energy

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

The idea behind New Source Energy and Altura 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.