Correlation Between Horizon Oil and San Leon

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Can any of the company-specific risk be diversified away by investing in both Horizon Oil and San Leon 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 San Leon 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 San Leon Energy, you can compare the effects of market volatilities on Horizon Oil and San Leon 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 San Leon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Oil and San Leon.

Diversification Opportunities for Horizon Oil and San Leon

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Horizon and San is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Oil Limited and San Leon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Leon Energy 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 San Leon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Leon Energy has no effect on the direction of Horizon Oil i.e., Horizon Oil and San Leon go up and down completely randomly.

Pair Corralation between Horizon Oil and San Leon

If you would invest  11.00  in Horizon Oil Limited on November 3, 2024 and sell it today you would earn a total of  3.00  from holding Horizon Oil Limited or generate 27.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy90.91%
ValuesDaily Returns

Horizon Oil Limited  vs.  San Leon Energy

 Performance 
       Timeline  
Horizon Oil Limited 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Horizon Oil Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
San Leon Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days San Leon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, San Leon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Horizon Oil and San Leon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Horizon Oil and San Leon

The main advantage of trading using opposite Horizon Oil and San Leon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Oil position performs unexpectedly, San Leon 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 San Leon will offset losses from the drop in San Leon's long position.
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The idea behind Horizon Oil Limited and San Leon Energy 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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