Correlation Between PetroShale and Santos
Can any of the company-specific risk be diversified away by investing in both PetroShale and Santos 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 Santos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroShale and Santos, you can compare the effects of market volatilities on PetroShale and Santos 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 Santos. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroShale and Santos.
Diversification Opportunities for PetroShale and Santos
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PetroShale and Santos is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Santos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santos 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 Santos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santos has no effect on the direction of PetroShale i.e., PetroShale and Santos go up and down completely randomly.
Pair Corralation between PetroShale and Santos
Assuming the 90 days horizon PetroShale is expected to under-perform the Santos. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 1.37 times less risky than Santos. The otc stock trades about -0.01 of its potential returns per unit of risk. The Santos is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 440.00 in Santos on August 30, 2024 and sell it today you would earn a total of 10.00 from holding Santos or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 88.28% |
| Values | Daily Returns |
PetroShale vs. Santos
Performance |
| Timeline |
| PetroShale |
| Santos |
PetroShale and Santos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroShale and Santos
The main advantage of trading using opposite PetroShale and Santos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroShale position performs unexpectedly, Santos 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 Santos will offset losses from the drop in Santos' long position.| PetroShale vs. Yamaha Motor Co | PetroShale vs. Nitto Denko Corp | PetroShale vs. Farmers Merchants Bancorp | PetroShale vs. Furukawa Electric Co |
| Santos vs. Permian Resources | Santos vs. Devon Energy | Santos vs. EOG Resources | Santos vs. Coterra Energy |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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