Correlation Between Stabilis Solutions and Imperial Oil

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

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

Diversification Opportunities for Stabilis Solutions and Imperial Oil

-0.71

Correlation Coefficient

Stabilis Solutions  Imperial Oil

Pay attention - limited upside

The 3 months correlation between Stabilis and Imperial is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Stabilis Solutions and Imperial Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imperial Oil and Stabilis 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 Stabilis Solutions are associated (or correlated) with Imperial Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imperial Oil has no effect on the direction of Stabilis Solutions i.e., Stabilis Solutions and Imperial Oil go up and down completely randomly.

Pair Corralation between Stabilis Solutions and Imperial Oil

Given the investment horizon of 90 days Stabilis Solutions is expected to generate 2.07 times more return on investment than Imperial Oil. However, Stabilis Solutions is 2.07 times more volatile than Imperial Oil. It trades about 0.14 of its potential returns per unit of risk. Imperial Oil is currently generating about -0.09 per unit of risk. If you would invest  444.00  in Stabilis Solutions on October 15, 2024 and sell it today you would earn a total of  148.00  from holding Stabilis Solutions or generate 33.33% return on investment over 90 days.

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

Stabilis Solutions  vs.  Imperial Oil

Stabilis Solutions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stabilis Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Stabilis Solutions reported solid returns over the last few months and may actually be approaching a breakup point.

Imperial Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imperial Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Stabilis Solutions and Imperial Oil

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

The idea behind Stabilis Solutions and Imperial Oil 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.