Correlation Between Pulse Oil and Simply Better

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

By analyzing existing cross correlation between Pulse Oil Corp and Simply Better Brands, you can compare the effects of market volatilities on Pulse Oil and Simply Better 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 Pulse Oil with a short position of Simply Better. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pulse Oil and Simply Better.

Diversification Opportunities for Pulse Oil and Simply Better

-0.4

Correlation Coefficient

Pulse Oil  Simply Better

Very good diversification

The 3 months correlation between Pulse and Simply is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pulse Oil Corp and Simply Better Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simply Better Brands and Pulse Oil 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 Pulse Oil Corp are associated (or correlated) with Simply Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simply Better Brands has no effect on the direction of Pulse Oil i.e., Pulse Oil and Simply Better go up and down completely randomly.

Pair Corralation between Pulse Oil and Simply Better

Assuming the 90 days horizon Pulse Oil Corp is expected to generate 6.48 times more return on investment than Simply Better. However, Pulse Oil is 6.48 times more volatile than Simply Better Brands. It trades about 0.13 of its potential returns per unit of risk. Simply Better Brands is currently generating about -0.03 per unit of risk. If you would invest  1.00  in Pulse Oil Corp on December 29, 2024 and sell it today you would earn a total of  0.50  from holding Pulse Oil Corp or generate 50.0% return on investment over 90 days.

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

Pulse Oil Corp  vs.  Simply Better Brands

Pulse Oil Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pulse Oil Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Pulse Oil showed solid returns over the last few months and may actually be approaching a breakup point.

Simply Better Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simply Better Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's fundamental drivers remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Pulse Oil and Simply Better

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

The idea behind Pulse Oil Corp and Simply Better Brands 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.