Correlation Between Horizon Oil and PetroShale
Can any of the company-specific risk be diversified away by investing in both Horizon Oil and PetroShale 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 Horizon Oil and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Oil Limited and PetroShale, you can compare the effects of market volatilities on Horizon Oil and PetroShale 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 Horizon Oil with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Oil and PetroShale.
Diversification Opportunities for Horizon Oil and PetroShale
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Horizon and PetroShale is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Oil Limited and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and Horizon Oil 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 Horizon Oil Limited are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Horizon Oil i.e., Horizon Oil and PetroShale go up and down completely randomly.
Pair Corralation between Horizon Oil and PetroShale
Assuming the 90 days horizon Horizon Oil Limited is expected to generate 2.97 times more return on investment than PetroShale. However, Horizon Oil is 2.97 times more volatile than PetroShale. It trades about 0.07 of its potential returns per unit of risk. PetroShale is currently generating about -0.07 per unit of risk. If you would invest 8.51 in Horizon Oil Limited on August 28, 2024 and sell it today you would earn a total of 4.49 from holding Horizon Oil Limited or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.88% |
| Values | Daily Returns |
Horizon Oil Limited vs. PetroShale
Performance |
| Timeline |
| Horizon Oil Limited |
| PetroShale |
Horizon Oil and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Oil and PetroShale
The main advantage of trading using opposite Horizon Oil and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Oil position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Horizon Oil vs. Permian Resources | Horizon Oil vs. Devon Energy | Horizon Oil vs. EOG Resources | Horizon Oil vs. Coterra Energy |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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