Correlation Between Yangarra Resources and Eco (Atlantic)

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

By analyzing existing cross correlation between Yangarra Resources and Eco Oil Gas, you can compare the effects of market volatilities on Yangarra Resources and Eco (Atlantic) 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 Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of Yangarra Resources and Eco (Atlantic).

Diversification Opportunities for Yangarra Resources and Eco (Atlantic)

0.25

Correlation Coefficient

Yangarra Resources  Eco (Atlantic)

Modest diversification

The 3 months correlation between Yangarra and Eco is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Yangarra Resources and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) 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 Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of Yangarra Resources i.e., Yangarra Resources and Eco (Atlantic) go up and down completely randomly.

Pair Corralation between Yangarra Resources and Eco (Atlantic)

Assuming the 90 days horizon Yangarra Resources is expected to generate 19.64 times less return on investment than Eco (Atlantic). But when comparing it to its historical volatility, Yangarra Resources is 3.77 times less risky than Eco (Atlantic). It trades about 0.0 of its potential returns per unit of risk. Eco Oil Gas is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Eco Oil Gas on December 29, 2024 and sell it today you would lose (2.00) from holding Eco Oil Gas or give up 15.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Yangarra Resources  vs.  Eco Oil Gas

Yangarra Resources

Risk-Adjusted Performance

Very Weak

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

Eco (Atlantic)

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yangarra Resources and Eco (Atlantic)

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

The idea behind Yangarra Resources and Eco Oil Gas 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.