Correlation Between PetroShale and Crew Energy

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

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

Diversification Opportunities for PetroShale and Crew Energy

0.0

Correlation Coefficient

PetroShale  Crew Energy

Pay attention - limited upside

The 3 months correlation between PetroShale and Crew is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Crew Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crew Energy and PetroShale 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 PetroShale are associated (or correlated) with Crew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crew Energy has no effect on the direction of PetroShale i.e., PetroShale and Crew Energy go up and down completely randomly.

Pair Corralation between PetroShale and Crew Energy

If you would invest  27.00  in PetroShale on December 27, 2024 and sell it today you would earn a total of  0.00  from holding PetroShale or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PetroShale  vs.  Crew Energy

PetroShale

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PetroShale are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, PetroShale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Crew Energy

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PetroShale and Crew Energy

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

The idea behind PetroShale and Crew 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.