Correlation Between ShaMaran Petroleum and Prairie Provident
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum and Prairie Provident 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 ShaMaran Petroleum and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ShaMaran Petroleum Corp and Prairie Provident Resources, you can compare the effects of market volatilities on ShaMaran Petroleum and Prairie Provident 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 ShaMaran Petroleum with a short position of Prairie Provident. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and Prairie Provident.
Diversification Opportunities for ShaMaran Petroleum and Prairie Provident
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ShaMaran and Prairie is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and ShaMaran Petroleum 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 ShaMaran Petroleum Corp are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Prairie Provident go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and Prairie Provident
Assuming the 90 days horizon ShaMaran Petroleum is expected to generate 1.12 times less return on investment than Prairie Provident. But when comparing it to its historical volatility, ShaMaran Petroleum Corp is 1.34 times less risky than Prairie Provident. It trades about 0.06 of its potential returns per unit of risk. Prairie Provident Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Prairie Provident Resources on September 1, 2024 and sell it today you would lose (6.60) from holding Prairie Provident Resources or give up 73.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShaMaran Petroleum Corp vs. Prairie Provident Resources
Performance |
| Timeline |
| ShaMaran Petroleum Corp |
| Prairie Provident |
ShaMaran Petroleum and Prairie Provident Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShaMaran Petroleum and Prairie Provident
The main advantage of trading using opposite ShaMaran Petroleum and Prairie Provident positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum position performs unexpectedly, Prairie Provident 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 Prairie Provident will offset losses from the drop in Prairie Provident's long position.| ShaMaran Petroleum vs. PetroShale | ShaMaran Petroleum vs. Africa Energy Corp | ShaMaran Petroleum vs. Horizon Oil Limited | ShaMaran Petroleum vs. Saturn Oil Gas |
| Prairie Provident vs. San Leon Energy | Prairie Provident vs. Enwell Energy plc | Prairie Provident vs. Dno ASA | Prairie Provident vs. Questerre 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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