Correlation Between Pantheon Resources and CGX Energy

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

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

Diversification Opportunities for Pantheon Resources and CGX Energy

-0.42

Correlation Coefficient

Pantheon Resources  CGX Energy

Very good diversification

The 3 months correlation between Pantheon and CGX is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pantheon Resources Plc and CGX Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGX Energy and Pantheon Resources 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 Pantheon Resources Plc are associated (or correlated) with CGX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGX Energy has no effect on the direction of Pantheon Resources i.e., Pantheon Resources and CGX Energy go up and down completely randomly.

Pair Corralation between Pantheon Resources and CGX Energy

Assuming the 90 days horizon Pantheon Resources Plc is expected to generate 0.82 times more return on investment than CGX Energy. However, Pantheon Resources Plc is 1.22 times less risky than CGX Energy. It trades about 0.32 of its potential returns per unit of risk. CGX Energy is currently generating about 0.07 per unit of risk. If you would invest  36.00  in Pantheon Resources Plc on December 3, 2024 and sell it today you would earn a total of  39.00  from holding Pantheon Resources Plc or generate 108.33% return on investment over 90 days.

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

Pantheon Resources Plc  vs.  CGX Energy

Pantheon Resources Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pantheon Resources Plc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pantheon Resources reported solid returns over the last few months and may actually be approaching a breakup point.

CGX Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CGX Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CGX 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 Pantheon Resources and CGX Energy

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

The idea behind Pantheon Resources Plc and CGX 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.