Correlation Between Summit Resources and Odyssey Energy

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

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

Diversification Opportunities for Summit Resources and Odyssey Energy

0.18

Correlation Coefficient

Summit Resources  Odyssey Energy

Average diversification

The 3 months correlation between Summit and Odyssey is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Summit Resources Limited and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy and Summit Resources 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 Summit Resources Limited are associated (or correlated) with Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Summit Resources i.e., Summit Resources and Odyssey Energy go up and down completely randomly.

Pair Corralation between Summit Resources and Odyssey Energy

Assuming the 90 days trading horizon Summit Resources Limited is expected to under-perform the Odyssey Energy. In addition to that, Summit Resources is 1.73 times more volatile than Odyssey Energy. It trades about -0.01 of its total potential returns per unit of risk. Odyssey Energy is currently generating about 0.02 per unit of volatility. If you would invest  2.80  in Odyssey Energy on December 2, 2024 and sell it today you would lose (0.80) from holding Odyssey Energy or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.2%
Values	Daily Returns

Summit Resources Limited  vs.  Odyssey Energy

Summit Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Summit Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Odyssey Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Odyssey Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Summit Resources and Odyssey Energy

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

The idea behind Summit Resources Limited and Odyssey 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.