Correlation Between CGX Energy and Ngx Energy

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

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

Diversification Opportunities for CGX Energy and Ngx Energy

-0.81

Correlation Coefficient

CGX Energy  Ngx Energy

Pay attention - limited upside

The 3 months correlation between CGX and Ngx is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CGX Energy and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International 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 Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of CGX Energy i.e., CGX Energy and Ngx Energy go up and down completely randomly.

Pair Corralation between CGX Energy and Ngx Energy

Assuming the 90 days horizon CGX Energy is expected to under-perform the Ngx Energy. In addition to that, CGX Energy is 1.59 times more volatile than Ngx Energy International. It trades about -0.04 of its total potential returns per unit of risk. Ngx Energy International is currently generating about 0.04 per unit of volatility. If you would invest  80.00  in Ngx Energy International on October 23, 2024 and sell it today you would earn a total of  37.00  from holding Ngx Energy International or generate 46.25% return on investment over 90 days.

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

CGX Energy  vs.  Ngx Energy International

CGX Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGX Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Ngx Energy International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ngx Energy International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ngx Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CGX Energy and Ngx Energy

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

The idea behind CGX Energy and Ngx Energy International 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.