Correlation Between Pine Cliff and Rubellite Energy

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

Diversification Opportunities for Pine Cliff and Rubellite Energy

0.87

Correlation Coefficient

Pine Cliff  Rubellite Energy

Very poor diversification

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

Pair Corralation between Pine Cliff and Rubellite Energy

Assuming the 90 days trading horizon Pine Cliff Energy is expected to under-perform the Rubellite Energy. But the stock apears to be less risky and, when comparing its historical volatility, Pine Cliff Energy is 1.09 times less risky than Rubellite Energy. The stock trades about -0.2 of its potential returns per unit of risk. The Rubellite Energy is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  209.00  in Rubellite Energy on December 29, 2024 and sell it today you would lose (15.00) from holding Rubellite Energy or give up 7.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Pine Cliff Energy  vs.  Rubellite 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.

Rubellite Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rubellite Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rubellite Energy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pine Cliff and Rubellite Energy

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

The idea behind Pine Cliff Energy and Rubellite 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.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.