Correlation Between CGX Energy and Eco Atlantic

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

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

Diversification Opportunities for CGX Energy and Eco Atlantic

0.42

Correlation Coefficient

CGX Energy  Eco Atlantic

Very weak diversification

The 3 months correlation between CGX and Eco is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CGX Energy and Eco Atlantic Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Atlantic Oil and CGX 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 CGX Energy are associated (or correlated) with Eco Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Atlantic Oil has no effect on the direction of CGX Energy i.e., CGX Energy and Eco Atlantic go up and down completely randomly.

Pair Corralation between CGX Energy and Eco Atlantic

Assuming the 90 days horizon CGX Energy is expected to generate 2.31 times more return on investment than Eco Atlantic. However, CGX Energy is 2.31 times more volatile than Eco Atlantic Oil. It trades about 0.04 of its potential returns per unit of risk. Eco Atlantic Oil is currently generating about -0.08 per unit of risk. If you would invest  13.00  in CGX Energy on December 27, 2024 and sell it today you would earn a total of  0.00  from holding CGX Energy or generate 0.0% return on investment over 90 days.

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

CGX Energy  vs.  Eco Atlantic Oil

CGX Energy

Risk-Adjusted Performance

Insignificant

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

Eco Atlantic Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Atlantic Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with CGX Energy and Eco Atlantic

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

The idea behind CGX Energy and Eco Atlantic Oil 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.