Correlation Between One Gas and Black Hills

Can any of the company-specific risk be diversified away by investing in both One Gas and Black Hills 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 One Gas and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for One Gas and Black Hills

0.87

Correlation Coefficient

One Gas  Black Hills

Very poor diversification

The 3 months correlation between One and Black is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and One Gas 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 One Gas are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of One Gas i.e., One Gas and Black Hills go up and down completely randomly.

Pair Corralation between One Gas and Black Hills

Considering the 90-day investment horizon One Gas is expected to generate 0.97 times more return on investment than Black Hills. However, One Gas is 1.03 times less risky than Black Hills. It trades about 0.07 of its potential returns per unit of risk. Black Hills is currently generating about 0.02 per unit of risk. If you would invest  6,929  in One Gas on December 26, 2024 and sell it today you would earn a total of  354.00  from holding One Gas or generate 5.11% return on investment over 90 days.

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

One Gas  vs.  Black Hills

One Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in One Gas are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Black Hills

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking signals, Black Hills is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with One Gas and Black Hills

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

The idea behind One Gas and Black Hills 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.