Correlation Between Arkanova Energy and CNX Resources

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

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

Diversification Opportunities for Arkanova Energy and CNX Resources

0.0

Correlation Coefficient

Arkanova Energy  CNX Resources

Pay attention - limited upside

The 3 months correlation between Arkanova and CNX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arkanova Energy and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and Arkanova 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 Arkanova Energy are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Arkanova Energy i.e., Arkanova Energy and CNX Resources go up and down completely randomly.

Pair Corralation between Arkanova Energy and CNX Resources

Given the investment horizon of 90 days Arkanova Energy is expected to generate 24.78 times more return on investment than CNX Resources. However, Arkanova Energy is 24.78 times more volatile than CNX Resources Corp. It trades about 0.04 of its potential returns per unit of risk. CNX Resources Corp is currently generating about 0.1 per unit of risk. If you would invest  0.19  in Arkanova Energy on September 29, 2024 and sell it today you would lose (0.18) from holding Arkanova Energy or give up 94.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Arkanova Energy  vs.  CNX Resources Corp

Arkanova Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

CNX Resources Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arkanova Energy and CNX Resources

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

The idea behind Arkanova Energy and CNX Resources 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.