Correlation Between PAO NOVATEK and True North

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

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

Diversification Opportunities for PAO NOVATEK and True North

-1.0

Correlation Coefficient

PAO NOVATEK  True North

Pay attention - limited upside

The 3 months correlation between PAO and True is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding PAO NOVATEK and True North Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Energy and PAO NOVATEK 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 PAO NOVATEK are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Energy has no effect on the direction of PAO NOVATEK i.e., PAO NOVATEK and True North go up and down completely randomly.

Pair Corralation between PAO NOVATEK and True North

If you would invest  0.01  in True North Energy on October 21, 2024 and sell it today you would earn a total of  0.00  from holding True North Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Strong
Accuracy	1.61%
Values	Daily Returns

PAO NOVATEK  vs.  True North Energy

PAO NOVATEK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PAO NOVATEK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, PAO NOVATEK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

True North Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days True North Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, True North is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PAO NOVATEK and True North

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

The idea behind PAO NOVATEK and True North 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.