Correlation Between Comstock Resources and Alamo Energy

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

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

Diversification Opportunities for Comstock Resources and Alamo Energy

-0.82

Correlation Coefficient

Comstock Resources  Alamo Energy

Pay attention - limited upside

The 3 months correlation between Comstock and Alamo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Resources and Alamo Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alamo Energy Corp and Comstock 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 Comstock Resources are associated (or correlated) with Alamo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alamo Energy Corp has no effect on the direction of Comstock Resources i.e., Comstock Resources and Alamo Energy go up and down completely randomly.

Pair Corralation between Comstock Resources and Alamo Energy

Considering the 90-day investment horizon Comstock Resources is expected to generate 0.16 times more return on investment than Alamo Energy. However, Comstock Resources is 6.08 times less risky than Alamo Energy. It trades about 0.23 of its potential returns per unit of risk. Alamo Energy Corp is currently generating about -0.13 per unit of risk. If you would invest  813.00  in Comstock Resources on February 27, 2024 and sell it today you would earn a total of  268.00  from holding Comstock Resources or generate 32.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Comstock Resources  vs.  Alamo Energy Corp

Comstock Resources

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Alamo Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alamo Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Comstock Resources and Alamo Energy

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

The idea behind Comstock Resources and Alamo Energy 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.