Correlation Between Parex Resources and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Parex Resources and Kelt Exploration 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 Parex Resources and Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Parex Resources and Kelt Exploration, you can compare the effects of market volatilities on Parex Resources and Kelt Exploration 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 Parex Resources with a short position of Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Parex Resources and Kelt Exploration.
Diversification Opportunities for Parex Resources and Kelt Exploration
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Parex and Kelt is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Parex Resources and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration and Parex Resources 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 Parex Resources are associated (or correlated) with Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Parex Resources i.e., Parex Resources and Kelt Exploration go up and down completely randomly.
Pair Corralation between Parex Resources and Kelt Exploration
Assuming the 90 days trading horizon Parex Resources is expected to generate 4.46 times less return on investment than Kelt Exploration. In addition to that, Parex Resources is 1.02 times more volatile than Kelt Exploration. It trades about 0.01 of its total potential returns per unit of risk. Kelt Exploration is currently generating about 0.03 per unit of volatility. If you would invest 530.00 in Kelt Exploration on August 26, 2024 and sell it today you would earn a total of 163.00 from holding Kelt Exploration or generate 30.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Parex Resources vs. Kelt Exploration
Performance |
| Timeline |
| Parex Resources |
| Kelt Exploration |
Parex Resources and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Parex Resources and Kelt Exploration
The main advantage of trading using opposite Parex Resources and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Parex Resources position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration's long position.| Parex Resources vs. Tourmaline Oil Corp | Parex Resources vs. PrairieSky Royalty | Parex Resources vs. ARC Resources | Parex Resources vs. MEG Energy Corp |
| Kelt Exploration vs. InPlay Oil Corp | Kelt Exploration vs. Yangarra Resources | Kelt Exploration vs. iShares Canadian HYBrid | Kelt Exploration vs. Altagas Cum Red |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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