Correlation Between Santos and Riley Exploration
Can any of the company-specific risk be diversified away by investing in both Santos and Riley 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 Santos and Riley Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos Ltd ADR and Riley Exploration Permian, you can compare the effects of market volatilities on Santos and Riley 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 Santos with a short position of Riley Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Riley Exploration.
Diversification Opportunities for Santos and Riley Exploration
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Santos and Riley is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Santos Ltd ADR and Riley Exploration Permian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riley Exploration Permian and Santos 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 Santos Ltd ADR are associated (or correlated) with Riley Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riley Exploration Permian has no effect on the direction of Santos i.e., Santos and Riley Exploration go up and down completely randomly.
Pair Corralation between Santos and Riley Exploration
If you would invest 2,671 in Riley Exploration Permian on September 1, 2024 and sell it today you would earn a total of 839.00 from holding Riley Exploration Permian or generate 31.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Santos Ltd ADR vs. Riley Exploration Permian
Performance |
| Timeline |
| Santos Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Riley Exploration Permian |
Santos and Riley Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos and Riley Exploration
The main advantage of trading using opposite Santos and Riley Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos position performs unexpectedly, Riley 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 Riley Exploration will offset losses from the drop in Riley Exploration's long position.| Santos vs. Aker BP ASA | Santos vs. Woodside Energy Group | Santos vs. APA Corporation | Santos vs. EQT Corporation |
| Riley Exploration vs. Vital Energy | Riley Exploration vs. Permian Resources | Riley Exploration vs. Magnolia Oil Gas | Riley Exploration vs. Ring 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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