Correlation Between Challenger Energy and Unit
Can any of the company-specific risk be diversified away by investing in both Challenger Energy and Unit 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 Challenger Energy and Unit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger Energy Group and Unit Corporation, you can compare the effects of market volatilities on Challenger Energy and Unit 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 Challenger Energy with a short position of Unit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger Energy and Unit.
Diversification Opportunities for Challenger Energy and Unit
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Challenger and Unit is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Challenger Energy Group and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit and Challenger 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 Challenger Energy Group are associated (or correlated) with Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Challenger Energy i.e., Challenger Energy and Unit go up and down completely randomly.
Pair Corralation between Challenger Energy and Unit
Assuming the 90 days horizon Challenger Energy Group is expected to generate 3.58 times more return on investment than Unit. However, Challenger Energy is 3.58 times more volatile than Unit Corporation. It trades about 0.16 of its potential returns per unit of risk. Unit Corporation is currently generating about 0.19 per unit of risk. If you would invest 10.00 in Challenger Energy Group on August 18, 2025 and sell it today you would earn a total of 6.00 from holding Challenger Energy Group or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.48% |
| Values | Daily Returns |
Challenger Energy Group vs. Unit Corp.
Performance |
| Timeline |
| Challenger Energy |
| Unit |
Challenger Energy and Unit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger Energy and Unit
The main advantage of trading using opposite Challenger Energy and Unit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger Energy position performs unexpectedly, Unit 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 Unit will offset losses from the drop in Unit's long position.| Challenger Energy vs. Altima Resources | Challenger Energy vs. CGX Energy | Challenger Energy vs. Blue Star Helium | Challenger Energy vs. Petro Matad Limited |
| Unit vs. John Wood Group | Unit vs. EXCO Resources | Unit vs. Ensign Energy Services | Unit vs. Energi Mega Persada |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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