Correlation Between APA and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both APA and Gulf Keystone 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 APA and Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Gulf Keystone Petroleum, you can compare the effects of market volatilities on APA and Gulf Keystone 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 APA with a short position of Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Gulf Keystone.
Diversification Opportunities for APA and Gulf Keystone
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between APA and Gulf is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum and APA 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 APA Corporation are associated (or correlated) with Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of APA i.e., APA and Gulf Keystone go up and down completely randomly.
Pair Corralation between APA and Gulf Keystone
Considering the 90-day investment horizon APA Corporation is expected to under-perform the Gulf Keystone. But the stock apears to be less risky and, when comparing its historical volatility, APA Corporation is 1.51 times less risky than Gulf Keystone. The stock trades about -0.07 of its potential returns per unit of risk. The Gulf Keystone Petroleum is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Gulf Keystone Petroleum on November 28, 2024 and sell it today you would earn a total of 56.00 from holding Gulf Keystone Petroleum or generate 29.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APA Corp. vs. Gulf Keystone Petroleum
Performance |
| Timeline |
| APA Corporation |
| Gulf Keystone Petroleum |
APA and Gulf Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Gulf Keystone
The main advantage of trading using opposite APA and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Gulf Keystone 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 Gulf Keystone will offset losses from the drop in Gulf Keystone's long position.The idea behind APA Corporation and Gulf Keystone Petroleum 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.| Gulf Keystone vs. San Leon Energy | Gulf Keystone vs. Enwell Energy plc | Gulf Keystone vs. Dno ASA | Gulf Keystone vs. Questerre Energy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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