Correlation Between Pine Cliff and Questerre Energy

Can any of the company-specific risk be diversified away by investing in both Pine Cliff and Questerre 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 Pine Cliff and Questerre Energy 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 Questerre Energy, you can compare the effects of market volatilities on Pine Cliff and Questerre 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 Pine Cliff with a short position of Questerre Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pine Cliff and Questerre Energy.

Diversification Opportunities for Pine Cliff and Questerre Energy

-0.78

Correlation Coefficient

Pine Cliff  Questerre Energy

Pay attention - limited upside

The 3 months correlation between Pine and Questerre is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Questerre Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questerre Energy 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 Questerre Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questerre Energy has no effect on the direction of Pine Cliff i.e., Pine Cliff and Questerre Energy go up and down completely randomly.

Pair Corralation between Pine Cliff and Questerre Energy

Assuming the 90 days trading horizon Pine Cliff Energy is expected to under-perform the Questerre Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pine Cliff Energy is 1.99 times less risky than Questerre Energy. The stock trades about -0.2 of its potential returns per unit of risk. The Questerre Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Questerre Energy on December 30, 2024 and sell it today you would earn a total of  4.00  from holding Questerre Energy or generate 16.67% return on investment over 90 days.

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

Pine Cliff Energy  vs.  Questerre Energy

Pine Cliff Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pine Cliff Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Questerre Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Questerre Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Questerre Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pine Cliff and Questerre Energy

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

The idea behind Pine Cliff Energy and Questerre Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.