Correlation Between Battalion Oil and United Energy

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

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

Diversification Opportunities for Battalion Oil and United Energy

-0.24

Correlation Coefficient

Battalion Oil  United Energy

Very good diversification

The 3 months correlation between Battalion and United is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and United Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Energy Corp and Battalion Oil 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 Battalion Oil Corp are associated (or correlated) with United Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Energy Corp has no effect on the direction of Battalion Oil i.e., Battalion Oil and United Energy go up and down completely randomly.

Pair Corralation between Battalion Oil and United Energy

Given the investment horizon of 90 days Battalion Oil is expected to generate 2.01 times less return on investment than United Energy. In addition to that, Battalion Oil is 1.11 times more volatile than United Energy Corp. It trades about 0.04 of its total potential returns per unit of risk. United Energy Corp is currently generating about 0.09 per unit of volatility. If you would invest  4.20  in United Energy Corp on May 6, 2025 and sell it today you would earn a total of  1.35  from holding United Energy Corp or generate 32.14% return on investment over 90 days.

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

Battalion Oil Corp  vs.  United Energy Corp

Battalion Oil Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Battalion Oil Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Battalion Oil disclosed solid returns over the last few months and may actually be approaching a breakup point.

United Energy Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in United Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Battalion Oil and United Energy

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

The idea behind Battalion Oil Corp and United 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.