Correlation Between APA and Santos
Can any of the company-specific risk be diversified away by investing in both APA and Santos 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 Santos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APA Corporation and Santos, you can compare the effects of market volatilities on APA and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of APA and Santos.
Diversification Opportunities for APA and Santos
Poor diversification
The 3 months correlation between APA and Santos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding APA Corp. and Santos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos has no effect on the direction of APA i.e., APA and Santos go up and down completely randomly.
Pair Corralation between APA and Santos
Considering the 90-day investment horizon APA Corporation is expected to under-perform the Santos. In addition to that, APA is 1.26 times more volatile than Santos. It trades about -0.14 of its total potential returns per unit of risk. Santos is currently generating about -0.02 per unit of volatility. If you would invest 353.00 in Santos on January 10, 2025 and sell it today you would lose (23.00) from holding Santos or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
APA Corp. vs. Santos
Performance |
| Timeline |
| APA Corporation |
| Santos |
APA and Santos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with APA and Santos
The main advantage of trading using opposite APA and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APA position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.The idea behind APA Corporation and Santos 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.| Santos vs. Africa Oil Corp | Santos vs. Athabasca Oil Corp | Santos vs. Journey Energy | Santos vs. Aquagold International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |