Correlation Between Yangarra Resources and Source Energy

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

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

Diversification Opportunities for Yangarra Resources and Source Energy

-0.23

Correlation Coefficient

Yangarra Resources  Source Energy

Very good diversification

The 3 months correlation between Yangarra and Source is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Yangarra Resources and Source Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Source Energy Services and Yangarra Resources 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 Yangarra Resources are associated (or correlated) with Source Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Source Energy Services has no effect on the direction of Yangarra Resources i.e., Yangarra Resources and Source Energy go up and down completely randomly.

Pair Corralation between Yangarra Resources and Source Energy

Assuming the 90 days trading horizon Yangarra Resources is expected to under-perform the Source Energy. But the stock apears to be less risky and, when comparing its historical volatility, Yangarra Resources is 1.95 times less risky than Source Energy. The stock trades about -0.01 of its potential returns per unit of risk. The Source Energy Services is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,280  in Source Energy Services on October 25, 2024 and sell it today you would earn a total of  320.00  from holding Source Energy Services or generate 25.0% return on investment over 90 days.

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

Yangarra Resources  vs.  Source Energy Services

Yangarra Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yangarra Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Yangarra Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Source Energy Services

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Source Energy Services are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Source Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yangarra Resources and Source Energy

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

The idea behind Yangarra Resources and Source Energy Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.