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
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PetroShale and Santos is 0.34. 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 generate 2.03 times less return on investment than Santos. But when comparing it to its historical volatility, PetroShale is 4.3 times less risky than Santos. It trades about 0.32 of its potential returns per unit of risk. Santos is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Santos on October 23, 2024 and sell it today you would earn a total of 69.00 from holding Santos or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| 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. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
| Santos vs. PetroShale | Santos vs. Inpex Corp ADR | Santos vs. Canacol Energy | Santos vs. Battalion Oil 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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