Correlation Between Xtra Energy and Atlantic Energy

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

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

Diversification Opportunities for Xtra Energy and Atlantic Energy

-0.49

Correlation Coefficient

Xtra Energy  Atlantic Energy

Very good diversification

The 3 months correlation between Xtra and Atlantic is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Xtra Energy Corp and Atlantic Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Energy Solutions and Xtra 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 Xtra Energy Corp are associated (or correlated) with Atlantic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Energy Solutions has no effect on the direction of Xtra Energy i.e., Xtra Energy and Atlantic Energy go up and down completely randomly.

Pair Corralation between Xtra Energy and Atlantic Energy

Given the investment horizon of 90 days Xtra Energy Corp is expected to under-perform the Atlantic Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Xtra Energy Corp is 2.45 times less risky than Atlantic Energy. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Atlantic Energy Solutions is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.80  in Atlantic Energy Solutions on December 28, 2024 and sell it today you would earn a total of  0.80  from holding Atlantic Energy Solutions or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Xtra Energy Corp  vs.  Atlantic Energy Solutions

Xtra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Atlantic Energy Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantic Energy Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Atlantic Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xtra Energy and Atlantic Energy

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

The idea behind Xtra Energy Corp and Atlantic Energy 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.