Correlation Between Permex Petroleum and Energy Revenue

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

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

Diversification Opportunities for Permex Petroleum and Energy Revenue

-0.34

Correlation Coefficient

Permex Petroleum  Energy Revenue

Very good diversification

The 3 months correlation between Permex and Energy is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Permex Petroleum and Energy Revenue Amer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Revenue Amer and Permex Petroleum 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 Permex Petroleum are associated (or correlated) with Energy Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Revenue Amer has no effect on the direction of Permex Petroleum i.e., Permex Petroleum and Energy Revenue go up and down completely randomly.

Pair Corralation between Permex Petroleum and Energy Revenue

Assuming the 90 days horizon Permex Petroleum is expected to generate 1.8 times less return on investment than Energy Revenue. But when comparing it to its historical volatility, Permex Petroleum is 1.85 times less risky than Energy Revenue. It trades about 0.13 of its potential returns per unit of risk. Energy Revenue Amer is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Energy Revenue Amer on May 7, 2025 and sell it today you would lose (2.90) from holding Energy Revenue Amer or give up 36.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Permex Petroleum  vs.  Energy Revenue Amer

Permex Petroleum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permex Petroleum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Permex Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Energy Revenue Amer

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Revenue Amer are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Energy Revenue displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Permex Petroleum and Energy Revenue

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

The idea behind Permex Petroleum and Energy Revenue Amer 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.