Correlation Between Royal Helium and Buru Energy

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

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

Diversification Opportunities for Royal Helium and Buru Energy

-0.1

Correlation Coefficient

Royal Helium  Buru Energy

Good diversification

The 3 months correlation between Royal and Buru is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Buru Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buru Energy Limited 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 Buru Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buru Energy Limited has no effect on the direction of Royal Helium i.e., Royal Helium and Buru Energy go up and down completely randomly.

Pair Corralation between Royal Helium and Buru Energy

Assuming the 90 days horizon Royal Helium is expected to under-perform the Buru Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Royal Helium is 2.62 times less risky than Buru Energy. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Buru Energy Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Buru Energy Limited on December 19, 2024 and sell it today you would earn a total of  0.00  from holding Buru Energy Limited or generate 0.0% return on investment over 90 days.

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

Royal Helium  vs.  Buru Energy Limited

Royal Helium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Helium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Buru Energy Limited

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Royal Helium and Buru Energy

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

The idea behind Royal Helium and Buru 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..