Correlation Between Petro Viking and Ngx Energy
Can any of the company-specific risk be diversified away by investing in both Petro Viking and Ngx 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 Petro Viking and Ngx Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Viking Energy and Ngx Energy International, you can compare the effects of market volatilities on Petro Viking and Ngx 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 Petro Viking with a short position of Ngx Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Viking and Ngx Energy.
Diversification Opportunities for Petro Viking and Ngx Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petro and Ngx is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petro Viking Energy and Ngx Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngx Energy International and Petro Viking 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 Petro Viking Energy are associated (or correlated) with Ngx Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngx Energy International has no effect on the direction of Petro Viking i.e., Petro Viking and Ngx Energy go up and down completely randomly.
Pair Corralation between Petro Viking and Ngx Energy
Assuming the 90 days horizon Petro Viking Energy is expected to generate 47.78 times more return on investment than Ngx Energy. However, Petro Viking is 47.78 times more volatile than Ngx Energy International. It trades about 0.21 of its potential returns per unit of risk. Ngx Energy International is currently generating about 0.07 per unit of risk. If you would invest 0.13 in Petro Viking Energy on November 24, 2024 and sell it today you would earn a total of 0.23 from holding Petro Viking Energy or generate 176.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.72% |
Values | Daily Returns |
Petro Viking Energy vs. Ngx Energy International
Performance |
Timeline |
Petro Viking Energy |
Ngx Energy International |
Petro Viking and Ngx Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petro Viking and Ngx Energy
The main advantage of trading using opposite Petro Viking and Ngx Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Viking position performs unexpectedly, Ngx 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 Ngx Energy will offset losses from the drop in Ngx Energy's long position.Petro Viking vs. ConocoPhillips | ||
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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