Correlation Between Pyxis Tankers and Brooge Energy

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

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

Diversification Opportunities for Pyxis Tankers and Brooge Energy

0.44

Correlation Coefficient

Pyxis Tankers  Brooge Energy

Very weak diversification

The 3 months correlation between Pyxis and Brooge is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Pyxis Tankers and Brooge Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Energy Limited and Pyxis Tankers 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 Pyxis Tankers are associated (or correlated) with Brooge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Energy Limited has no effect on the direction of Pyxis Tankers i.e., Pyxis Tankers and Brooge Energy go up and down completely randomly.

Pair Corralation between Pyxis Tankers and Brooge Energy

Assuming the 90 days horizon Pyxis Tankers is expected to generate 0.91 times more return on investment than Brooge Energy. However, Pyxis Tankers is 1.1 times less risky than Brooge Energy. It trades about 0.07 of its potential returns per unit of risk. Brooge Energy Limited is currently generating about -0.18 per unit of risk. If you would invest  25.00  in Pyxis Tankers on September 27, 2024 and sell it today you would lose (3.00) from holding Pyxis Tankers or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.24%
Values	Daily Returns

Pyxis Tankers  vs.  Brooge Energy Limited

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brooge Energy Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Brooge Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pyxis Tankers and Brooge Energy

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

The idea behind Pyxis Tankers and Brooge Energy Limited 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.