Correlation Between Pason Systems and Baytex Energy

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

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

Diversification Opportunities for Pason Systems and Baytex Energy

0.22

Correlation Coefficient

Pason Systems  Baytex Energy

Modest diversification

The 3 months correlation between Pason and Baytex is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Pason Systems and Baytex Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baytex Energy Corp and Pason Systems 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 Pason Systems are associated (or correlated) with Baytex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baytex Energy Corp has no effect on the direction of Pason Systems i.e., Pason Systems and Baytex Energy go up and down completely randomly.

Pair Corralation between Pason Systems and Baytex Energy

Assuming the 90 days trading horizon Pason Systems is expected to generate 0.75 times more return on investment than Baytex Energy. However, Pason Systems is 1.33 times less risky than Baytex Energy. It trades about 0.02 of its potential returns per unit of risk. Baytex Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  1,393  in Pason Systems on September 3, 2024 and sell it today you would earn a total of  24.00  from holding Pason Systems or generate 1.72% return on investment over 90 days.

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

Pason Systems  vs.  Baytex Energy Corp

Pason Systems

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pason Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Pason Systems is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Baytex Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baytex Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Pason Systems and Baytex Energy

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

The idea behind Pason Systems and Baytex Energy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.