Correlation Between TomCo Energy and SDX Energy

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

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

Diversification Opportunities for TomCo Energy and SDX Energy

-1.0

Correlation Coefficient

TomCo Energy  SDX Energy

Pay attention - limited upside

The 3 months correlation between TomCo and SDX is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding TomCo Energy Plc and SDX Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SDX Energy plc and TomCo 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 TomCo Energy Plc are associated (or correlated) with SDX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SDX Energy plc has no effect on the direction of TomCo Energy i.e., TomCo Energy and SDX Energy go up and down completely randomly.

Pair Corralation between TomCo Energy and SDX Energy

If you would invest  0.01  in SDX Energy plc on August 16, 2025 and sell it today you would earn a total of  0.00  from holding SDX Energy plc or generate 0.0% return on investment over 90 days.

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

TomCo Energy Plc  vs.  SDX Energy plc

TomCo Energy Plc

Risk-Adjusted Performance

Weakest

Over the last 90 days TomCo Energy Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, TomCo Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SDX Energy plc

Risk-Adjusted Performance

Weakest

Over the last 90 days SDX Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, SDX Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TomCo Energy and SDX Energy

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

The idea behind TomCo Energy Plc and SDX Energy plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.