Correlation Between IRPC PCL and Kunlun Energy

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

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

Diversification Opportunities for IRPC PCL and Kunlun Energy

-0.34

Correlation Coefficient

IRPC PCL  Kunlun Energy

Very good diversification

The 3 months correlation between IRPC and Kunlun is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding IRPC PCL NVDR and Kunlun Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunlun Energy and IRPC PCL 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 IRPC PCL NVDR are associated (or correlated) with Kunlun Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunlun Energy has no effect on the direction of IRPC PCL i.e., IRPC PCL and Kunlun Energy go up and down completely randomly.

Pair Corralation between IRPC PCL and Kunlun Energy

Assuming the 90 days trading horizon IRPC PCL NVDR is expected to under-perform the Kunlun Energy. But the stock apears to be less risky and, when comparing its historical volatility, IRPC PCL NVDR is 1.25 times less risky than Kunlun Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Kunlun Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Kunlun Energy on September 14, 2024 and sell it today you would earn a total of  15.00  from holding Kunlun Energy or generate 18.29% return on investment over 90 days.

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

IRPC PCL NVDR   vs.  Kunlun Energy

IRPC PCL NVDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRPC PCL NVDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kunlun Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kunlun Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking indicators, Kunlun Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IRPC PCL and Kunlun Energy

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

The idea behind IRPC PCL NVDR and Kunlun 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.