Correlation Between Ora Banda and Energy Resources

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

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

Diversification Opportunities for Ora Banda and Energy Resources

-0.47

Correlation Coefficient

Ora Banda  Energy Resources

Very good diversification

The 3 months correlation between Ora and Energy is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ora Banda Mining and Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Resources and Ora Banda 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 Ora Banda Mining are associated (or correlated) with Energy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Resources has no effect on the direction of Ora Banda i.e., Ora Banda and Energy Resources go up and down completely randomly.

Pair Corralation between Ora Banda and Energy Resources

Assuming the 90 days trading horizon Ora Banda Mining is expected to generate 0.22 times more return on investment than Energy Resources. However, Ora Banda Mining is 4.54 times less risky than Energy Resources. It trades about 0.23 of its potential returns per unit of risk. Energy Resources is currently generating about 0.05 per unit of risk. If you would invest  68.00  in Ora Banda Mining on December 29, 2024 and sell it today you would earn a total of  45.00  from holding Ora Banda Mining or generate 66.18% return on investment over 90 days.

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

Ora Banda Mining  vs.  Energy Resources

Ora Banda Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ora Banda Mining are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Ora Banda unveiled solid returns over the last few months and may actually be approaching a breakup point.

Energy Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Energy Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ora Banda and Energy Resources

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

The idea behind Ora Banda Mining and Energy Resources 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.