Correlation Between Valeura Energy and Gulf Keystone
Can any of the company-specific risk be diversified away by investing in both Valeura Energy 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 Valeura Energy and Gulf Keystone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valeura Energy and Gulf Keystone Petroleum, you can compare the effects of market volatilities on Valeura Energy 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 Valeura Energy with a short position of Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valeura Energy and Gulf Keystone.
Diversification Opportunities for Valeura Energy and Gulf Keystone
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Valeura and Gulf is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy 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 Valeura Energy 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 Valeura Energy 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 Valeura Energy i.e., Valeura Energy and Gulf Keystone go up and down completely randomly.
Pair Corralation between Valeura Energy and Gulf Keystone
Assuming the 90 days horizon Valeura Energy is expected to generate 0.88 times more return on investment than Gulf Keystone. However, Valeura Energy is 1.13 times less risky than Gulf Keystone. It trades about 0.3 of its potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.1 per unit of risk. If you would invest 320.00 in Valeura Energy on September 1, 2024 and sell it today you would earn a total of 105.00 from holding Valeura Energy or generate 32.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valeura Energy vs. Gulf Keystone Petroleum
Performance |
| Timeline |
| Valeura Energy |
| Gulf Keystone Petroleum |
Valeura Energy and Gulf Keystone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valeura Energy and Gulf Keystone
The main advantage of trading using opposite Valeura Energy and Gulf Keystone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valeura Energy 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.| Valeura Energy vs. PepsiCo | Valeura Energy vs. Nascent Wine | Valeura Energy vs. NioCorp Developments Ltd | Valeura Energy vs. Perseus Mining Limited |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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