Correlation Between Santos and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both Santos and Gulf Keystone 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 Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos and Gulf Keystone Petroleum, you can compare the effects of market volatilities on Santos and Gulf Keystone 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 Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Gulf Keystone.
Diversification Opportunities for Santos and Gulf Keystone
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Santos and Gulf is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Santos and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum 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 are associated (or correlated) with Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Santos i.e., Santos and Gulf Keystone go up and down completely randomly.
Pair Corralation between Santos and Gulf Keystone
Assuming the 90 days horizon Santos is expected to under-perform the Gulf Keystone. But the pink sheet apears to be less risky and, when comparing its historical volatility, Santos is 1.57 times less risky than Gulf Keystone. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Gulf Keystone Petroleum is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 158.00 in Gulf Keystone Petroleum on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Gulf Keystone Petroleum or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Santos vs. Gulf Keystone Petroleum
Performance |
| Timeline |
| Santos |
| Gulf Keystone Petroleum |
Santos and Gulf Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos and Gulf Keystone
The main advantage of trading using opposite Santos and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos position performs unexpectedly, Gulf Keystone 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 Gulf Keystone will offset losses from the drop in Gulf Keystone's long position.| Santos vs. Permian Resources | Santos vs. Devon Energy | Santos vs. EOG Resources | Santos vs. Coterra Energy |
| Gulf Keystone vs. Permian Resources | Gulf Keystone vs. Devon Energy | Gulf Keystone vs. EOG Resources | Gulf Keystone vs. Coterra 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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