Correlation Between Talon Energy and Laramide Resources

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

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

Diversification Opportunities for Talon Energy and Laramide Resources

-0.79

Correlation Coefficient

Talon Energy  Laramide Resources

Pay attention - limited upside

The 3 months correlation between Talon and Laramide is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Talon Energy and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Talon Energy 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 Talon Energy are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Talon Energy i.e., Talon Energy and Laramide Resources go up and down completely randomly.

Pair Corralation between Talon Energy and Laramide Resources

If you would invest  5.00  in Talon Energy on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Talon Energy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.55%
Values	Daily Returns

Talon Energy  vs.  Laramide Resources

Talon Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Talon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Talon Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Laramide Resources

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Talon Energy and Laramide Resources

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

The idea behind Talon Energy and Laramide 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.