Correlation Between Waters and Melbana Energy

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

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

Diversification Opportunities for Waters and Melbana Energy

0.0

Correlation Coefficient

Waters  Melbana Energy

Pay attention - limited upside

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

Pair Corralation between Waters and Melbana Energy

If you would invest  33,156  in Waters on September 4, 2024 and sell it today you would earn a total of  5,554  from holding Waters or generate 16.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Waters  vs.  Melbana Energy Limited

Waters

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Waters unveiled solid returns over the last few months and may actually be approaching a breakup point.

Melbana Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Waters and Melbana Energy

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

The idea behind Waters and Melbana Energy Limited 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.