Correlation Between CKX Lands and GeoPark

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

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

Diversification Opportunities for CKX Lands and GeoPark

0.2

Correlation Coefficient

CKX Lands  GeoPark

Modest diversification

The 3 months correlation between CKX and GeoPark is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding CKX Lands and GeoPark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoPark and CKX Lands 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 CKX Lands are associated (or correlated) with GeoPark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoPark has no effect on the direction of CKX Lands i.e., CKX Lands and GeoPark go up and down completely randomly.

Pair Corralation between CKX Lands and GeoPark

Considering the 90-day investment horizon CKX Lands is expected to under-perform the GeoPark. But the stock apears to be less risky and, when comparing its historical volatility, CKX Lands is 1.74 times less risky than GeoPark. The stock trades about -0.06 of its potential returns per unit of risk. The GeoPark is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  865.00  in GeoPark on December 27, 2024 and sell it today you would lose (60.00) from holding GeoPark or give up 6.94% of portfolio value over 90 days.

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

CKX Lands  vs.  GeoPark

CKX Lands

Risk-Adjusted Performance

Very Weak

Over the last 90 days CKX Lands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GeoPark

Risk-Adjusted Performance

Very Weak

Over the last 90 days GeoPark has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GeoPark is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CKX Lands and GeoPark

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

The idea behind CKX Lands and GeoPark 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.