Correlation Between Sino American and PetroShale
Can any of the company-specific risk be diversified away by investing in both Sino American 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 Sino American and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sino American Oil and PetroShale, you can compare the effects of market volatilities on Sino American 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 Sino American with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and PetroShale.
Diversification Opportunities for Sino American and PetroShale
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sino and PetroShale is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Oil and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and Sino American 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 Sino American Oil 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 Sino American i.e., Sino American and PetroShale go up and down completely randomly.
Pair Corralation between Sino American and PetroShale
Given the investment horizon of 90 days Sino American Oil is expected to generate 13.91 times more return on investment than PetroShale. However, Sino American is 13.91 times more volatile than PetroShale. It trades about 0.06 of its potential returns per unit of risk. PetroShale is currently generating about 0.0 per unit of risk. If you would invest 23.00 in Sino American Oil on September 2, 2024 and sell it today you would lose (23.00) from holding Sino American Oil or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Sino American Oil vs. PetroShale
Performance |
| Timeline |
| Sino American Oil |
| PetroShale |
Sino American and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sino American and PetroShale
The main advantage of trading using opposite Sino American and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sino American 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.| Sino American vs. True North Energy | Sino American vs. Pantheon Resources Plc | Sino American vs. Cgrowth Capital | Sino American vs. MMEX Resources Corp |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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