Correlation Between Pine Cliff and Athabasca Oil

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

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

Diversification Opportunities for Pine Cliff and Athabasca Oil

0.15

Correlation Coefficient

Pine Cliff  Athabasca Oil

Average diversification

The 3 months correlation between Pine and Athabasca is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil Corp and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of Pine Cliff i.e., Pine Cliff and Athabasca Oil go up and down completely randomly.

Pair Corralation between Pine Cliff and Athabasca Oil

Assuming the 90 days horizon Pine Cliff Energy is expected to under-perform the Athabasca Oil. In addition to that, Pine Cliff is 1.52 times more volatile than Athabasca Oil Corp. It trades about -0.02 of its total potential returns per unit of risk. Athabasca Oil Corp is currently generating about -0.02 per unit of volatility. If you would invest  381.00  in Athabasca Oil Corp on September 3, 2024 and sell it today you would lose (16.00) from holding Athabasca Oil Corp or give up 4.2% of portfolio value over 90 days.

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

Pine Cliff Energy  vs.  Athabasca Oil Corp

Pine Cliff Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pine Cliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pine Cliff is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Athabasca Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Athabasca Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Athabasca Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Pine Cliff and Athabasca Oil

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

The idea behind Pine Cliff Energy and Athabasca Oil Corp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.