Correlation Between Petro Viking and Parex Resources
Can any of the company-specific risk be diversified away by investing in both Petro Viking and Parex 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 Petro Viking and Parex Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Viking Energy and Parex Resources, you can compare the effects of market volatilities on Petro Viking and Parex 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 Petro Viking with a short position of Parex Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Viking and Parex Resources.
Diversification Opportunities for Petro Viking and Parex Resources
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petro and Parex is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Petro Viking Energy and Parex Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parex Resources and Petro Viking 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 Petro Viking Energy are associated (or correlated) with Parex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parex Resources has no effect on the direction of Petro Viking i.e., Petro Viking and Parex Resources go up and down completely randomly.
Pair Corralation between Petro Viking and Parex Resources
Assuming the 90 days horizon Petro Viking Energy is expected to generate 51.93 times more return on investment than Parex Resources. However, Petro Viking is 51.93 times more volatile than Parex Resources. It trades about 0.21 of its potential returns per unit of risk. Parex Resources is currently generating about 0.23 per unit of risk. If you would invest 0.84 in Petro Viking Energy on October 23, 2024 and sell it today you would lose (0.04) from holding Petro Viking Energy or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Petro Viking Energy vs. Parex Resources
Performance |
| Timeline |
| Petro Viking Energy |
| Parex Resources |
Petro Viking and Parex Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petro Viking and Parex Resources
The main advantage of trading using opposite Petro Viking and Parex Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Viking position performs unexpectedly, Parex 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 Parex Resources will offset losses from the drop in Parex Resources' long position.| Petro Viking vs. Avanti Energy | Petro Viking vs. CGX Energy | Petro Viking vs. Royal Helium | Petro Viking vs. Eco Oil Gas |
| Parex Resources vs. Petro Viking Energy | Parex Resources vs. Surge Energy | Parex Resources vs. Razor Energy Corp | Parex Resources vs. Prospera 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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