Correlation Between Ring Energy and Calumet Specialty

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

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

Diversification Opportunities for Ring Energy and Calumet Specialty

0.45

Correlation Coefficient

Ring Energy  Calumet Specialty

Very weak diversification

The 3 months correlation between Ring and Calumet is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ring Energy and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty and Ring Energy 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 Ring Energy are associated (or correlated) with Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Ring Energy i.e., Ring Energy and Calumet Specialty go up and down completely randomly.

Pair Corralation between Ring Energy and Calumet Specialty

Considering the 90-day investment horizon Ring Energy is expected to under-perform the Calumet Specialty. But the stock apears to be less risky and, when comparing its historical volatility, Ring Energy is 1.01 times less risky than Calumet Specialty. The stock trades about -0.01 of its potential returns per unit of risk. The Calumet Specialty Products is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,801  in Calumet Specialty Products on December 3, 2024 and sell it today you would lose (368.00) from holding Calumet Specialty Products or give up 20.43% of portfolio value over 90 days.

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

Ring Energy  vs.  Calumet Specialty Products

Ring Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ring Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Calumet Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calumet Specialty Products 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 primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Ring Energy and Calumet Specialty

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

The idea behind Ring Energy and Calumet Specialty Products 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.