Correlation Between AAC Clyde and ShaMaran Petroleum

Can any of the company-specific risk be diversified away by investing in both AAC Clyde 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 AAC Clyde and ShaMaran Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AAC Clyde Space and ShaMaran Petroleum Corp, you can compare the effects of market volatilities on AAC Clyde 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 AAC Clyde with a short position of ShaMaran Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC Clyde and ShaMaran Petroleum.

Diversification Opportunities for AAC Clyde and ShaMaran Petroleum

0.93

Correlation Coefficient

AAC Clyde  ShaMaran Petroleum

Almost no diversification

The 3 months correlation between AAC and ShaMaran is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AAC Clyde Space 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 AAC Clyde 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 AAC Clyde Space 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 AAC Clyde i.e., AAC Clyde and ShaMaran Petroleum go up and down completely randomly.

Pair Corralation between AAC Clyde and ShaMaran Petroleum

Assuming the 90 days trading horizon AAC Clyde is expected to generate 2.63 times less return on investment than ShaMaran Petroleum. In addition to that, AAC Clyde is 1.23 times more volatile than ShaMaran Petroleum Corp. It trades about 0.03 of its total potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.08 per unit of volatility. If you would invest  70.00  in ShaMaran Petroleum Corp on September 28, 2024 and sell it today you would earn a total of  22.00  from holding ShaMaran Petroleum Corp or generate 31.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AAC Clyde Space  vs.  ShaMaran Petroleum Corp

AAC Clyde Space

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

ShaMaran Petroleum Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, ShaMaran Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AAC Clyde and ShaMaran Petroleum

The main advantage of trading using opposite AAC Clyde and ShaMaran Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC Clyde 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.

The idea behind AAC Clyde Space and ShaMaran Petroleum Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.