Correlation Between Sound Energy and ShaMaran Petroleum
Can any of the company-specific risk be diversified away by investing in both Sound Energy and ShaMaran Petroleum 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 Sound Energy and ShaMaran Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Energy plc and ShaMaran Petroleum Corp, you can compare the effects of market volatilities on Sound Energy and ShaMaran Petroleum 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 Sound Energy with a short position of ShaMaran Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Energy and ShaMaran Petroleum.
Diversification Opportunities for Sound Energy and ShaMaran Petroleum
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sound and ShaMaran is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sound Energy plc and ShaMaran Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShaMaran Petroleum Corp and Sound Energy 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 Sound Energy plc are associated (or correlated) with ShaMaran Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShaMaran Petroleum Corp has no effect on the direction of Sound Energy i.e., Sound Energy and ShaMaran Petroleum go up and down completely randomly.
Pair Corralation between Sound Energy and ShaMaran Petroleum
Assuming the 90 days horizon Sound Energy plc is expected to generate 3.83 times more return on investment than ShaMaran Petroleum. However, Sound Energy is 3.83 times more volatile than ShaMaran Petroleum Corp. It trades about 0.05 of its potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.08 per unit of risk. If you would invest 1.48 in Sound Energy plc on September 3, 2024 and sell it today you would lose (1.07) from holding Sound Energy plc or give up 72.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sound Energy plc vs. ShaMaran Petroleum Corp
Performance |
| Timeline |
| Sound Energy plc |
| ShaMaran Petroleum Corp |
Sound Energy and ShaMaran Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Energy and ShaMaran Petroleum
The main advantage of trading using opposite Sound Energy and ShaMaran Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Energy position performs unexpectedly, ShaMaran Petroleum 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 ShaMaran Petroleum will offset losses from the drop in ShaMaran Petroleum's long position.| Sound Energy vs. CNX Resources Corp | Sound Energy vs. MV Oil Trust | Sound Energy vs. San Juan Basin | Sound Energy vs. VOC Energy Trust |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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