Correlation Between Tullow Oil and ShaMaran Petroleum
Can any of the company-specific risk be diversified away by investing in both Tullow Oil 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 Tullow Oil and ShaMaran Petroleum 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 ShaMaran Petroleum Corp, you can compare the effects of market volatilities on Tullow Oil 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 Tullow Oil with a short position of ShaMaran Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tullow Oil and ShaMaran Petroleum.
Diversification Opportunities for Tullow Oil and ShaMaran Petroleum
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tullow and ShaMaran is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tullow Oil 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 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 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 Tullow Oil i.e., Tullow Oil and ShaMaran Petroleum go up and down completely randomly.
Pair Corralation between Tullow Oil and ShaMaran Petroleum
Assuming the 90 days horizon Tullow Oil PLC is expected to under-perform the ShaMaran Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Tullow Oil PLC is 1.79 times less risky than ShaMaran Petroleum. The pink sheet trades about -0.06 of its potential returns per unit of risk. The ShaMaran Petroleum Corp is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 5.00 in ShaMaran Petroleum Corp on September 1, 2024 and sell it today you would earn a total of 4.00 from holding ShaMaran Petroleum Corp or generate 80.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tullow Oil PLC vs. ShaMaran Petroleum Corp
Performance |
| Timeline |
| Tullow Oil PLC |
| ShaMaran Petroleum Corp |
Tullow Oil and ShaMaran Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tullow Oil and ShaMaran Petroleum
The main advantage of trading using opposite Tullow Oil and ShaMaran Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tullow Oil 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.| Tullow Oil vs. Permian Resources | Tullow Oil vs. Devon Energy | Tullow Oil vs. EOG Resources | Tullow Oil vs. Coterra Energy |
| ShaMaran Petroleum vs. PetroShale | ShaMaran Petroleum vs. Africa Energy Corp | ShaMaran Petroleum vs. Horizon Oil Limited | ShaMaran Petroleum vs. Saturn Oil Gas |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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