Correlation Between Star Petroleum and Ai Energy

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Can any of the company-specific risk be diversified away by investing in both Star Petroleum and Ai 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 Star Petroleum and Ai Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Petroleum Refining and Ai Energy Public, you can compare the effects of market volatilities on Star Petroleum and Ai 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 Star Petroleum with a short position of Ai Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Petroleum and Ai Energy.

Diversification Opportunities for Star Petroleum and Ai Energy

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Star and AIE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Star Petroleum Refining and Ai Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ai Energy Public and Star Petroleum 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 Star Petroleum Refining are associated (or correlated) with Ai Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ai Energy Public has no effect on the direction of Star Petroleum i.e., Star Petroleum and Ai Energy go up and down completely randomly.

Pair Corralation between Star Petroleum and Ai Energy

Assuming the 90 days trading horizon Star Petroleum Refining is expected to generate 1.75 times more return on investment than Ai Energy. However, Star Petroleum is 1.75 times more volatile than Ai Energy Public. It trades about -0.09 of its potential returns per unit of risk. Ai Energy Public is currently generating about -0.16 per unit of risk. If you would invest  715.00  in Star Petroleum Refining on October 10, 2024 and sell it today you would lose (80.00) from holding Star Petroleum Refining or give up 11.19% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Star Petroleum Refining  vs.  Ai Energy Public

 Performance 
       Timeline  
Star Petroleum Refining 

Risk-Adjusted Performance

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Over the last 90 days Star Petroleum Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Ai Energy Public 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ai Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Star Petroleum and Ai Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Star Petroleum and Ai Energy

The main advantage of trading using opposite Star Petroleum and Ai Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Petroleum position performs unexpectedly, Ai 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 Ai Energy will offset losses from the drop in Ai Energy's long position.
The idea behind Star Petroleum Refining and Ai Energy Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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