Correlation Between Hemisphere Energy and ShaMaran Petroleum
Can any of the company-specific risk be diversified away by investing in both Hemisphere Energy and ShaMaran Petroleum 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 Hemisphere Energy and ShaMaran Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hemisphere Energy and ShaMaran Petroleum Corp, you can compare the effects of market volatilities on Hemisphere Energy and ShaMaran Petroleum 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 Hemisphere Energy with a short position of ShaMaran Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and ShaMaran Petroleum.
Diversification Opportunities for Hemisphere Energy and ShaMaran Petroleum
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hemisphere and ShaMaran is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy and ShaMaran Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShaMaran Petroleum Corp and Hemisphere 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 Hemisphere Energy are associated (or correlated) with ShaMaran Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShaMaran Petroleum Corp has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and ShaMaran Petroleum go up and down completely randomly.
Pair Corralation between Hemisphere Energy and ShaMaran Petroleum
Assuming the 90 days horizon Hemisphere Energy is expected to generate 14.06 times less return on investment than ShaMaran Petroleum. But when comparing it to its historical volatility, Hemisphere Energy is 3.2 times less risky than ShaMaran Petroleum. It trades about 0.06 of its potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 8.00 in ShaMaran Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 3.00 from holding ShaMaran Petroleum Corp or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hemisphere Energy vs. ShaMaran Petroleum Corp
Performance |
| Timeline |
| Hemisphere Energy |
| ShaMaran Petroleum Corp |
Hemisphere Energy and ShaMaran Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hemisphere Energy and ShaMaran Petroleum
The main advantage of trading using opposite Hemisphere Energy and ShaMaran Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy position performs unexpectedly, ShaMaran Petroleum 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 ShaMaran Petroleum will offset losses from the drop in ShaMaran Petroleum's long position.| Hemisphere Energy vs. InPlay Oil Corp | Hemisphere Energy vs. Pine Cliff Energy | Hemisphere Energy vs. Journey Energy | Hemisphere Energy vs. Yangarra Resources |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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