Correlation Between PSQ Holdings and Harbour Energy

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

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

Diversification Opportunities for PSQ Holdings and Harbour Energy

-0.51

Correlation Coefficient

PSQ Holdings  Harbour Energy

Excellent diversification

The 3 months correlation between PSQ and Harbour is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and Harbour Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbour Energy PLC and PSQ Holdings 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 PSQ Holdings are associated (or correlated) with Harbour Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbour Energy PLC has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and Harbour Energy go up and down completely randomly.

Pair Corralation between PSQ Holdings and Harbour Energy

Given the investment horizon of 90 days PSQ Holdings is expected to generate 5.69 times more return on investment than Harbour Energy. However, PSQ Holdings is 5.69 times more volatile than Harbour Energy PLC. It trades about 0.04 of its potential returns per unit of risk. Harbour Energy PLC is currently generating about 0.01 per unit of risk. If you would invest  490.00  in PSQ Holdings on October 2, 2024 and sell it today you would lose (36.00) from holding PSQ Holdings or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

PSQ Holdings  vs.  Harbour Energy PLC

PSQ Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSQ Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, PSQ Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Harbour Energy PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harbour Energy PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PSQ Holdings and Harbour Energy

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

The idea behind PSQ Holdings and Harbour Energy PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.