Correlation Between Tullow Oil and Pieridae Energy
Can any of the company-specific risk be diversified away by investing in both Tullow Oil and Pieridae Energy 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 Tullow Oil and Pieridae Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tullow Oil plc and Pieridae Energy Limited, you can compare the effects of market volatilities on Tullow Oil and Pieridae Energy 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 Tullow Oil with a short position of Pieridae Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tullow Oil and Pieridae Energy.
Diversification Opportunities for Tullow Oil and Pieridae Energy
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tullow and Pieridae is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil plc and Pieridae Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pieridae Energy and Tullow Oil 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 Tullow Oil plc are associated (or correlated) with Pieridae Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pieridae Energy has no effect on the direction of Tullow Oil i.e., Tullow Oil and Pieridae Energy go up and down completely randomly.
Pair Corralation between Tullow Oil and Pieridae Energy
Assuming the 90 days horizon Tullow Oil plc is expected to generate 1.07 times more return on investment than Pieridae Energy. However, Tullow Oil is 1.07 times more volatile than Pieridae Energy Limited. It trades about 0.02 of its potential returns per unit of risk. Pieridae Energy Limited is currently generating about -0.01 per unit of risk. If you would invest 30.00 in Tullow Oil plc on August 30, 2024 and sell it today you would lose (1.00) from holding Tullow Oil plc or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tullow Oil plc vs. Pieridae Energy Limited
Performance |
| Timeline |
| Tullow Oil plc |
| Pieridae Energy |
Tullow Oil and Pieridae Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tullow Oil and Pieridae Energy
The main advantage of trading using opposite Tullow Oil and Pieridae Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tullow Oil position performs unexpectedly, Pieridae Energy 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 Pieridae Energy will offset losses from the drop in Pieridae Energy's long position.| Tullow Oil vs. Dno ASA | Tullow Oil vs. PetroShale | Tullow Oil vs. Horizon Oil Limited | Tullow Oil vs. Enwell Energy plc |
| Pieridae Energy vs. Southern Cross Media | Pieridae Energy vs. Prospera Energy | Pieridae Energy vs. Ngx Energy International | Pieridae Energy vs. ROK Resources |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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