Correlation Between PetroShale and MMEX Resources
Can any of the company-specific risk be diversified away by investing in both PetroShale and MMEX Resources 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 PetroShale and MMEX Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and MMEX Resources Corp, you can compare the effects of market volatilities on PetroShale and MMEX Resources 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 PetroShale with a short position of MMEX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and MMEX Resources.
Diversification Opportunities for PetroShale and MMEX Resources
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PetroShale and MMEX is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and MMEX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMEX Resources Corp and PetroShale 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 PetroShale are associated (or correlated) with MMEX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMEX Resources Corp has no effect on the direction of PetroShale i.e., PetroShale and MMEX Resources go up and down completely randomly.
Pair Corralation between PetroShale and MMEX Resources
Assuming the 90 days horizon PetroShale is expected to under-perform the MMEX Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 75.84 times less risky than MMEX Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The MMEX Resources Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1.80 in MMEX Resources Corp on September 3, 2024 and sell it today you would lose (1.79) from holding MMEX Resources Corp or give up 99.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
PetroShale vs. MMEX Resources Corp
Performance |
| Timeline |
| PetroShale |
| MMEX Resources Corp |
PetroShale and MMEX Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and MMEX Resources
The main advantage of trading using opposite PetroShale and MMEX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, MMEX Resources 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 MMEX Resources will offset losses from the drop in MMEX Resources' long position.| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| MMEX Resources vs. MDM Permian | MMEX Resources vs. Saturn Oil Gas | MMEX Resources vs. Razor Energy Corp | MMEX Resources vs. Strat Petroleum |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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