Correlation Between Searchlight Solutions and Vulcan Energy

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

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

Diversification Opportunities for Searchlight Solutions and Vulcan Energy

0.0

Correlation Coefficient

Searchlight Solutions  Vulcan Energy

Pay attention - limited upside

The 3 months correlation between Searchlight and Vulcan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Searchlight Solutions and Vulcan Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Energy Resources and Searchlight Solutions 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 Searchlight Solutions are associated (or correlated) with Vulcan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Energy Resources has no effect on the direction of Searchlight Solutions i.e., Searchlight Solutions and Vulcan Energy go up and down completely randomly.

Pair Corralation between Searchlight Solutions and Vulcan Energy

If you would invest  314.00  in Vulcan Energy Resources on September 23, 2024 and sell it today you would earn a total of  46.00  from holding Vulcan Energy Resources or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Searchlight Solutions  vs.  Vulcan Energy Resources

Searchlight Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Searchlight Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Searchlight Solutions is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vulcan Energy Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Energy Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Vulcan Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Searchlight Solutions and Vulcan Energy

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

The idea behind Searchlight Solutions and Vulcan Energy Resources 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.