Correlation Between Comstock Resources and Stamper Oil

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

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

Diversification Opportunities for Comstock Resources and Stamper Oil

-0.21

Correlation Coefficient

Comstock Resources  Stamper Oil

Very good diversification

The 3 months correlation between Comstock and Stamper is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Comstock Resources and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas and Comstock 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 Comstock Resources are associated (or correlated) with Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of Comstock Resources i.e., Comstock Resources and Stamper Oil go up and down completely randomly.

Pair Corralation between Comstock Resources and Stamper Oil

Considering the 90-day investment horizon Comstock Resources is expected to generate 34.67 times less return on investment than Stamper Oil. But when comparing it to its historical volatility, Comstock Resources is 20.1 times less risky than Stamper Oil. It trades about 0.04 of its potential returns per unit of risk. Stamper Oil Gas is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Stamper Oil Gas on October 4, 2024 and sell it today you would lose (22.00) from holding Stamper Oil Gas or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Comstock Resources  vs.  Stamper Oil Gas

Comstock Resources

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Comstock Resources are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Comstock Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Stamper Oil Gas

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stamper Oil Gas are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Stamper Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comstock Resources and Stamper Oil

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

The idea behind Comstock Resources and Stamper Oil Gas 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.