Correlation Between Pine Cliff and Orca Energy

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

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

Diversification Opportunities for Pine Cliff and Orca Energy

0.43

Correlation Coefficient

Pine Cliff  Orca Energy

Very weak diversification

The 3 months correlation between Pine and Orca is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pine Cliff Energy and Orca Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orca Energy Group and Pine Cliff 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 Pine Cliff Energy are associated (or correlated) with Orca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orca Energy Group has no effect on the direction of Pine Cliff i.e., Pine Cliff and Orca Energy go up and down completely randomly.

Pair Corralation between Pine Cliff and Orca Energy

Assuming the 90 days trading horizon Pine Cliff Energy is expected to generate 1.2 times more return on investment than Orca Energy. However, Pine Cliff is 1.2 times more volatile than Orca Energy Group. It trades about 0.16 of its potential returns per unit of risk. Orca Energy Group is currently generating about -0.01 per unit of risk. If you would invest  55.00  in Pine Cliff Energy on April 23, 2025 and sell it today you would earn a total of  20.00  from holding Pine Cliff Energy or generate 36.36% return on investment over 90 days.

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

Pine Cliff Energy  vs.  Orca Energy Group

Pine Cliff Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pine Cliff Energy are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Pine Cliff displayed solid returns over the last few months and may actually be approaching a breakup point.

Orca Energy Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orca Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Orca Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pine Cliff and Orca Energy

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

The idea behind Pine Cliff Energy and Orca Energy Group 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.