Correlation Between PetroShale and Pacific Coast
Can any of the company-specific risk be diversified away by investing in both PetroShale and Pacific Coast 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 Pacific Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Pacific Coast Oil, you can compare the effects of market volatilities on PetroShale and Pacific Coast 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 Pacific Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Pacific Coast.
Diversification Opportunities for PetroShale and Pacific Coast
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between PetroShale and Pacific is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Pacific Coast Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Coast Oil 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 Pacific Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Coast Oil has no effect on the direction of PetroShale i.e., PetroShale and Pacific Coast go up and down completely randomly.
Pair Corralation between PetroShale and Pacific Coast
Assuming the 90 days horizon PetroShale is expected to under-perform the Pacific Coast. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 1.14 times less risky than Pacific Coast. The otc stock trades about -0.01 of its potential returns per unit of risk. The Pacific Coast Oil is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Pacific Coast Oil on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Pacific Coast Oil or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 28.3% |
| Values | Daily Returns |
PetroShale vs. Pacific Coast Oil
Performance |
| Timeline |
| PetroShale |
| Pacific Coast Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PetroShale and Pacific Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Pacific Coast
The main advantage of trading using opposite PetroShale and Pacific Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Pacific Coast 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 Pacific Coast will offset losses from the drop in Pacific Coast's long position.| PetroShale vs. Petroleo Brasileiro Petrobras | PetroShale vs. Equinor ASA ADR | PetroShale vs. Eni SpA ADR | PetroShale vs. YPF Sociedad Anonima |
| Pacific Coast vs. Gulf Keystone Petroleum | Pacific Coast vs. PetroShale | Pacific Coast vs. ShaMaran Petroleum Corp | Pacific Coast vs. Africa Energy Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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