Correlation Between Antero Resources and Trio Petroleum

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

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

Diversification Opportunities for Antero Resources and Trio Petroleum

0.69

Correlation Coefficient

Antero Resources  Trio Petroleum

Poor diversification

The 3 months correlation between Antero and Trio is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Antero Resources Corp and Trio Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Petroleum Corp and Antero Resources 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 Antero Resources Corp are associated (or correlated) with Trio Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Petroleum Corp has no effect on the direction of Antero Resources i.e., Antero Resources and Trio Petroleum go up and down completely randomly.

Pair Corralation between Antero Resources and Trio Petroleum

Allowing for the 90-day total investment horizon Antero Resources is expected to generate 2.94 times less return on investment than Trio Petroleum. But when comparing it to its historical volatility, Antero Resources Corp is 4.8 times less risky than Trio Petroleum. It trades about 0.14 of its potential returns per unit of risk. Trio Petroleum Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  106.00  in Trio Petroleum Corp on December 24, 2024 and sell it today you would earn a total of  30.00  from holding Trio Petroleum Corp or generate 28.3% return on investment over 90 days.

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

Antero Resources Corp  vs.  Trio Petroleum Corp

Antero Resources Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Antero Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Antero Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Trio Petroleum Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Petroleum Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Trio Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Antero Resources and Trio Petroleum

The main advantage of trading using opposite Antero Resources and Trio Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Antero Resources position performs unexpectedly, Trio 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 Trio Petroleum will offset losses from the drop in Trio Petroleum's long position.

The idea behind Antero Resources Corp and Trio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.