Correlation Between Contact Energy and Genesis Energy

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

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

Diversification Opportunities for Contact Energy and Genesis Energy

0.84
  Correlation Coefficient
Contact Energy
Genesis Energy

Very poor diversification

The 3 months correlation between Contact and Genesis is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Contact Energy Limited Ordinar and Genesis Energy Limited Ordinar in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy and Contact 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 Contact Energy Limited are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy has no effect on the direction of Contact Energy i.e. Contact Energy and Genesis Energy go up and down completely randomly.

Pair Corralation between Contact Energy and Genesis Energy

Assuming the 30 trading days horizon, Contact Energy Limited is expected to under-perform the Genesis Energy. In addition to that, Contact Energy is 1.25 times more volatile than Genesis Energy Limited. It trades about -0.05 of its total potential returns per unit of risk. Genesis Energy Limited is currently generating about 0.03 per unit of volatility. If you would invest  281.00  in Genesis Energy Limited on June 13, 2020 and sell it today you would earn a total of  7.00  from holding Genesis Energy Limited or generate 2.49% return on investment over 30 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Contact Energy Limited Ordinar  vs.  Genesis Energy Limited Ordinar

 Performance (%) 
      Timeline 
Contact Energy 
00

Contact Energy Risk-Adjusted Performance

Over the last 30 days Contact Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Genesis Energy 
22

Genesis Energy Risk-Adjusted Performance

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 30 days. In spite of fairly strong basic indicators, Genesis Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short term losses for the investors.

Contact Energy and Genesis Energy Volatility Contrast

 Predicted Return Density 
      Returns 

Contact Energy Limited

Pair trading matchups for Contact Energy

Genesis Energy Limited

Pair trading matchups for Genesis Energy

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