Correlation Between Century Petroleum and Delek Drilling

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

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

Diversification Opportunities for Century Petroleum and Delek Drilling

-0.04

Correlation Coefficient

Century Petroleum  Delek Drilling

Good diversification

The 3 months correlation between Century and Delek is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Century Petroleum Corp and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling and Century Petroleum 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 Century Petroleum Corp are associated (or correlated) with Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Century Petroleum i.e., Century Petroleum and Delek Drilling go up and down completely randomly.

Pair Corralation between Century Petroleum and Delek Drilling

Given the investment horizon of 90 days Century Petroleum Corp is expected to generate 112.55 times more return on investment than Delek Drilling. However, Century Petroleum is 112.55 times more volatile than Delek Drilling . It trades about 0.22 of its potential returns per unit of risk. Delek Drilling is currently generating about 0.13 per unit of risk. If you would invest  0.00  in Century Petroleum Corp on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Century Petroleum Corp or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Century Petroleum Corp  vs.  Delek Drilling

Century Petroleum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak basic indicators, Century Petroleum exhibited solid returns over the last few months and may actually be approaching a breakup point.

Delek Drilling

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Delek Drilling are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Delek Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Century Petroleum and Delek Drilling

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

The idea behind Century Petroleum Corp and Delek Drilling 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.