Correlation Between Royal Helium and Innergex Renewable

Can any of the company-specific risk be diversified away by investing in both Royal Helium and Innergex Renewable 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 Royal Helium and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Royal Helium and Innergex Renewable

0.46

Correlation Coefficient

Royal Helium  Innergex Renewable

Very weak diversification

The 3 months correlation between Royal and Innergex is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy and Royal Helium 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 Royal Helium are associated (or correlated) with Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Royal Helium i.e., Royal Helium and Innergex Renewable go up and down completely randomly.

Pair Corralation between Royal Helium and Innergex Renewable

Assuming the 90 days horizon Royal Helium is expected to generate 37.72 times more return on investment than Innergex Renewable. However, Royal Helium is 37.72 times more volatile than Innergex Renewable Energy. It trades about 0.26 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about 0.14 per unit of risk. If you would invest  2.50  in Royal Helium on December 30, 2024 and sell it today you would earn a total of  3,458  from holding Royal Helium or generate 138300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Royal Helium  vs.  Innergex Renewable Energy

Royal Helium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Helium are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Royal Helium showed solid returns over the last few months and may actually be approaching a breakup point.

Innergex Renewable Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innergex Renewable Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Innergex Renewable displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Royal Helium and Innergex Renewable

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

The idea behind Royal Helium and Innergex Renewable 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.