Correlation Between ShaMaran Petroleum and International Petroleum
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum and International 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 ShaMaran Petroleum and International Petroleum 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 International Petroleum, you can compare the effects of market volatilities on ShaMaran Petroleum and International 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 ShaMaran Petroleum with a short position of International Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and International Petroleum.
Diversification Opportunities for ShaMaran Petroleum and International Petroleum
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ShaMaran and International is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and International Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Petroleum 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 International Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Petroleum has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and International Petroleum go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and International Petroleum
Assuming the 90 days trading horizon ShaMaran Petroleum Corp is expected to generate 1.9 times more return on investment than International Petroleum. However, ShaMaran Petroleum is 1.9 times more volatile than International Petroleum. It trades about 0.55 of its potential returns per unit of risk. International Petroleum is currently generating about 0.08 per unit of risk. If you would invest 60.00 in ShaMaran Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 30.00 from holding ShaMaran Petroleum Corp or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShaMaran Petroleum Corp vs. International Petroleum
Performance |
| Timeline |
| ShaMaran Petroleum Corp |
| International Petroleum |
ShaMaran Petroleum and International Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShaMaran Petroleum and International Petroleum
The main advantage of trading using opposite ShaMaran Petroleum and International Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum position performs unexpectedly, International 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 International Petroleum will offset losses from the drop in International Petroleum's long position.| ShaMaran Petroleum vs. Avanza Bank Holding | ShaMaran Petroleum vs. Media and Games | ShaMaran Petroleum vs. Svenska Handelsbanken AB | ShaMaran Petroleum vs. Beowulf Mining PLC |
| International Petroleum vs. Africa Oil Corp | International Petroleum vs. International Petroleum Corp | International Petroleum vs. Lundin Mining |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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