Correlation Between Cohen Dev and Tamar Petroleum

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

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

Diversification Opportunities for Cohen Dev and Tamar Petroleum

-0.56

Correlation Coefficient

Cohen Dev  Tamar Petroleum

Excellent diversification

The 3 months correlation between Cohen and Tamar is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Dev and Tamar Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamar Petroleum and Cohen Dev 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 Cohen Dev are associated (or correlated) with Tamar Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamar Petroleum has no effect on the direction of Cohen Dev i.e., Cohen Dev and Tamar Petroleum go up and down completely randomly.

Pair Corralation between Cohen Dev and Tamar Petroleum

Assuming the 90 days trading horizon Cohen Dev is expected to generate 0.76 times more return on investment than Tamar Petroleum. However, Cohen Dev is 1.32 times less risky than Tamar Petroleum. It trades about 0.09 of its potential returns per unit of risk. Tamar Petroleum is currently generating about -0.11 per unit of risk. If you would invest  1,034,000  in Cohen Dev on February 6, 2024 and sell it today you would earn a total of  19,000  from holding Cohen Dev or generate 1.84% return on investment over 90 days.

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

Cohen Dev  vs.  Tamar Petroleum

Cohen Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cohen Dev has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cohen Dev is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tamar Petroleum

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tamar Petroleum are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tamar Petroleum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cohen Dev and Tamar Petroleum

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

The idea behind Cohen Dev and Tamar Petroleum 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.