Correlation Between Valeura Energy and Graphite One

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

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

Diversification Opportunities for Valeura Energy and Graphite One

-0.47

Correlation Coefficient

Valeura Energy  Graphite One

Very good diversification

The 3 months correlation between Valeura and Graphite is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Graphite One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite One and Valeura 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 Valeura Energy are associated (or correlated) with Graphite One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite One has no effect on the direction of Valeura Energy i.e., Valeura Energy and Graphite One go up and down completely randomly.

Pair Corralation between Valeura Energy and Graphite One

Assuming the 90 days trading horizon Valeura Energy is expected to generate 0.83 times more return on investment than Graphite One. However, Valeura Energy is 1.2 times less risky than Graphite One. It trades about 0.05 of its potential returns per unit of risk. Graphite One is currently generating about 0.0 per unit of risk. If you would invest  560.00  in Valeura Energy on September 28, 2024 and sell it today you would earn a total of  102.00  from holding Valeura Energy or generate 18.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.32%
Values	Daily Returns

Valeura Energy  vs.  Graphite One

Valeura Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Valeura Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Graphite One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Graphite One is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Valeura Energy and Graphite One

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

The idea behind Valeura Energy and Graphite One 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.