Correlation Between ShaMaran Petroleum and Tullow Oil
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum and Tullow Oil 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 Tullow Oil 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 Tullow Oil PLC, you can compare the effects of market volatilities on ShaMaran Petroleum and Tullow Oil 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 Tullow Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and Tullow Oil.
Diversification Opportunities for ShaMaran Petroleum and Tullow Oil
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ShaMaran and Tullow is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Tullow Oil PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tullow Oil PLC 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 Tullow Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tullow Oil PLC has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Tullow Oil go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and Tullow Oil
Assuming the 90 days horizon ShaMaran Petroleum Corp is expected to generate 0.87 times more return on investment than Tullow Oil. However, ShaMaran Petroleum Corp is 1.15 times less risky than Tullow Oil. It trades about 0.39 of its potential returns per unit of risk. Tullow Oil PLC is currently generating about -0.03 per unit of risk. If you would invest 9.00 in ShaMaran Petroleum Corp on December 1, 2024 and sell it today you would earn a total of 5.00 from holding ShaMaran Petroleum Corp or generate 55.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShaMaran Petroleum Corp vs. Tullow Oil PLC
Performance |
| Timeline |
| ShaMaran Petroleum Corp |
| Tullow Oil PLC |
ShaMaran Petroleum and Tullow Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShaMaran Petroleum and Tullow Oil
The main advantage of trading using opposite ShaMaran Petroleum and Tullow Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum position performs unexpectedly, Tullow Oil 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 Tullow Oil will offset losses from the drop in Tullow Oil'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 |
| Tullow Oil vs. San Leon Energy | Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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