Correlation Between ReoStar Energy and New Frontier

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

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

Diversification Opportunities for ReoStar Energy and New Frontier

-0.63

Correlation Coefficient

ReoStar Energy  New Frontier

Excellent diversification

The 3 months correlation between ReoStar and New is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ReoStar Energy Corp and New Frontier Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Frontier Energy and ReoStar 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 ReoStar Energy Corp are associated (or correlated) with New Frontier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Frontier Energy has no effect on the direction of ReoStar Energy i.e., ReoStar Energy and New Frontier go up and down completely randomly.

Pair Corralation between ReoStar Energy and New Frontier

Given the investment horizon of 90 days ReoStar Energy is expected to generate 42.59 times less return on investment than New Frontier. But when comparing it to its historical volatility, ReoStar Energy Corp is 13.56 times less risky than New Frontier. It trades about 0.05 of its potential returns per unit of risk. New Frontier Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.01  in New Frontier Energy on May 4, 2025 and sell it today you would earn a total of  0.40  from holding New Frontier Energy or generate 4000.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

ReoStar Energy Corp  vs.  New Frontier Energy

ReoStar Energy Corp

Risk-Adjusted Performance

Insignificant

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

New Frontier Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in New Frontier Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, New Frontier demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReoStar Energy and New Frontier

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

The idea behind ReoStar Energy Corp and New Frontier Energy 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.