Correlation Between Stallion Discoveries and New Energy

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

Diversification Opportunities for Stallion Discoveries and New Energy

StallionNewDiversified AwayStallionNewDiversified Away100%
0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Stallion and New is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Stallion Discoveries Corp and New Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Energy Metals and Stallion Discoveries 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 Stallion Discoveries Corp are associated (or correlated) with New Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Energy Metals has no effect on the direction of Stallion Discoveries i.e., Stallion Discoveries and New Energy go up and down completely randomly.

Pair Corralation between Stallion Discoveries and New Energy

Assuming the 90 days horizon Stallion Discoveries is expected to generate 139.54 times less return on investment than New Energy. But when comparing it to its historical volatility, Stallion Discoveries Corp is 12.85 times less risky than New Energy. It trades about 0.01 of its potential returns per unit of risk. New Energy Metals is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  31.00  in New Energy Metals on November 22, 2024 and sell it today you would lose (28.23) from holding New Energy Metals or give up 91.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy96.67%
ValuesDaily Returns

Stallion Discoveries Corp  vs.  New Energy Metals

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 02004006008001,000
JavaScript chart by amCharts 3.21.15STLNF NRGYF
       Timeline  
Stallion Discoveries Corp 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Stallion Discoveries Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Stallion Discoveries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.0150.020.0250.030.0350.040.045
New Energy Metals 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in New Energy Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Energy reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.025000000000000030.050.10.150.20.250.3

Stallion Discoveries and New Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-32.9-24.64-16.38-8.120.098.316.4524.7533.05 0.00050.00100.00150.00200.00250.00300.0035
JavaScript chart by amCharts 3.21.15STLNF NRGYF
       Returns  

Pair Trading with Stallion Discoveries and New Energy

The main advantage of trading using opposite Stallion Discoveries and New Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stallion Discoveries position performs unexpectedly, New 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 New Energy will offset losses from the drop in New Energy's long position.
The idea behind Stallion Discoveries Corp and New Energy Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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