Correlation Between Canacol Energy and Condor Petroleum

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

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

Diversification Opportunities for Canacol Energy and Condor Petroleum

0.1

Correlation Coefficient

Canacol Energy  Condor Petroleum

Average diversification

The 3 months correlation between Canacol and Condor is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Canacol Energy and Condor Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Petroleum and Canacol 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 Canacol Energy are associated (or correlated) with Condor Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Petroleum has no effect on the direction of Canacol Energy i.e., Canacol Energy and Condor Petroleum go up and down completely randomly.

Pair Corralation between Canacol Energy and Condor Petroleum

Assuming the 90 days horizon Canacol Energy is expected to generate 1.05 times more return on investment than Condor Petroleum. However, Canacol Energy is 1.05 times more volatile than Condor Petroleum. It trades about 0.01 of its potential returns per unit of risk. Condor Petroleum is currently generating about -0.01 per unit of risk. If you would invest  258.00  in Canacol Energy on December 29, 2024 and sell it today you would lose (4.00) from holding Canacol Energy or give up 1.55% of portfolio value over 90 days.

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

Canacol Energy  vs.  Condor Petroleum

Canacol Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canacol Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Canacol Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Condor Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Condor Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Condor Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Canacol Energy and Condor Petroleum

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

The idea behind Canacol Energy and Condor Petroleum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.