Correlation Between Gulf Keystone and Cardinal Energy
Can any of the company-specific risk be diversified away by investing in both Gulf Keystone and Cardinal 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 Gulf Keystone and Cardinal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gulf Keystone Petroleum and Cardinal Energy, you can compare the effects of market volatilities on Gulf Keystone and Cardinal 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 Gulf Keystone with a short position of Cardinal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Keystone and Cardinal Energy.
Diversification Opportunities for Gulf Keystone and Cardinal Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gulf and Cardinal is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Keystone Petroleum and Cardinal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Energy and Gulf Keystone 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 Gulf Keystone Petroleum are associated (or correlated) with Cardinal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Energy has no effect on the direction of Gulf Keystone i.e., Gulf Keystone and Cardinal Energy go up and down completely randomly.
Pair Corralation between Gulf Keystone and Cardinal Energy
Assuming the 90 days horizon Gulf Keystone Petroleum is expected to generate 3.88 times more return on investment than Cardinal Energy. However, Gulf Keystone is 3.88 times more volatile than Cardinal Energy. It trades about 0.05 of its potential returns per unit of risk. Cardinal Energy is currently generating about 0.04 per unit of risk. If you would invest 139.00 in Gulf Keystone Petroleum on September 3, 2024 and sell it today you would earn a total of 46.00 from holding Gulf Keystone Petroleum or generate 33.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.56% |
| Values | Daily Returns |
Gulf Keystone Petroleum vs. Cardinal Energy
Performance |
| Timeline |
| Gulf Keystone Petroleum |
| Cardinal Energy |
Gulf Keystone and Cardinal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gulf Keystone and Cardinal Energy
The main advantage of trading using opposite Gulf Keystone and Cardinal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Keystone position performs unexpectedly, Cardinal 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 Cardinal Energy will offset losses from the drop in Cardinal Energy's long position.| Gulf Keystone vs. San Leon Energy | Gulf Keystone vs. Enwell Energy plc | Gulf Keystone vs. Dno ASA | Gulf Keystone vs. Questerre Energy |
| Cardinal Energy vs. Tamarack Valley Energy | Cardinal Energy vs. Pine Cliff Energy | Cardinal Energy vs. MEG Energy Corp | Cardinal Energy vs. Headwater Exploration |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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