Correlation Between Basic Energy and Allhome Corp

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

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

Diversification Opportunities for Basic Energy and Allhome Corp

-0.36

Correlation Coefficient

Basic Energy  Allhome Corp

Very good diversification

The 3 months correlation between Basic and Allhome is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Basic Energy Corp and Allhome Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allhome Corp and Basic 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 Basic Energy Corp are associated (or correlated) with Allhome Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allhome Corp has no effect on the direction of Basic Energy i.e., Basic Energy and Allhome Corp go up and down completely randomly.

Pair Corralation between Basic Energy and Allhome Corp

Assuming the 90 days trading horizon Basic Energy Corp is expected to generate 2.3 times more return on investment than Allhome Corp. However, Basic Energy is 2.3 times more volatile than Allhome Corp. It trades about 0.02 of its potential returns per unit of risk. Allhome Corp is currently generating about -0.05 per unit of risk. If you would invest  12.00  in Basic Energy Corp on April 21, 2025 and sell it today you would earn a total of  0.00  from holding Basic Energy Corp or generate 0.0% return on investment over 90 days.

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

Basic Energy Corp  vs.  Allhome Corp

Basic Energy Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Basic Energy Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Basic Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Allhome Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allhome Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Basic Energy and Allhome Corp

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

The idea behind Basic Energy Corp and Allhome Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.