Correlation Between Vulcan Energy and Searchlight Solutions

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

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

Diversification Opportunities for Vulcan Energy and Searchlight Solutions

0.0

Correlation Coefficient

Vulcan Energy  Searchlight Solutions

Pay attention - limited upside

The 3 months correlation between Vulcan and Searchlight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources and Searchlight Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Searchlight Solutions and Vulcan 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 Vulcan Energy Resources are associated (or correlated) with Searchlight Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Searchlight Solutions has no effect on the direction of Vulcan Energy i.e., Vulcan Energy and Searchlight Solutions go up and down completely randomly.

Pair Corralation between Vulcan Energy and Searchlight Solutions

If you would invest  158.00  in Vulcan Energy Resources on September 23, 2024 and sell it today you would earn a total of  202.00  from holding Vulcan Energy Resources or generate 127.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Vulcan Energy Resources  vs.  Searchlight Solutions

Vulcan Energy Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Energy Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Vulcan Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Searchlight Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Searchlight Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Searchlight Solutions is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Energy and Searchlight Solutions

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

The idea behind Vulcan Energy Resources and Searchlight Solutions 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .