Correlation Between Odyssey Energy and Summit Resources

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

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

Diversification Opportunities for Odyssey Energy and Summit Resources

-0.03

Correlation Coefficient

Odyssey Energy  Summit Resources

Good diversification

The 3 months correlation between Odyssey and Summit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Energy and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources and Odyssey Energy 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 Odyssey Energy are associated (or correlated) with Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of Odyssey Energy i.e., Odyssey Energy and Summit Resources go up and down completely randomly.

Pair Corralation between Odyssey Energy and Summit Resources

Assuming the 90 days trading horizon Odyssey Energy is expected to generate 0.87 times more return on investment than Summit Resources. However, Odyssey Energy is 1.14 times less risky than Summit Resources. It trades about 0.1 of its potential returns per unit of risk. Summit Resources Limited is currently generating about 0.05 per unit of risk. If you would invest  1.80  in Odyssey Energy on December 30, 2024 and sell it today you would earn a total of  0.50  from holding Odyssey Energy or generate 27.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Odyssey Energy  vs.  Summit Resources Limited

Odyssey Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Odyssey Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Summit Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Resources Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Summit Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Odyssey Energy and Summit Resources

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

The idea behind Odyssey Energy and Summit Resources Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.