Correlation Between Spartan Delta and Gulf Keystone

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

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

Diversification Opportunities for Spartan Delta and Gulf Keystone

-0.68

Correlation Coefficient

Spartan Delta  Gulf Keystone

Excellent diversification

The 3 months correlation between Spartan and Gulf is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Spartan Delta Corp and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum and Spartan Delta 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 Spartan Delta Corp are associated (or correlated) with Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Spartan Delta i.e., Spartan Delta and Gulf Keystone go up and down completely randomly.

Pair Corralation between Spartan Delta and Gulf Keystone

Assuming the 90 days horizon Spartan Delta Corp is expected to under-perform the Gulf Keystone. In addition to that, Spartan Delta is 1.63 times more volatile than Gulf Keystone Petroleum. It trades about -0.18 of its total potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about -0.11 per unit of volatility. If you would invest  196.00  in Gulf Keystone Petroleum on September 18, 2024 and sell it today you would lose (9.00) from holding Gulf Keystone Petroleum or give up 4.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Spartan Delta Corp  vs.  Gulf Keystone Petroleum

Spartan Delta Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spartan Delta Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Gulf Keystone Petroleum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Keystone Petroleum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Gulf Keystone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spartan Delta and Gulf Keystone

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

The idea behind Spartan Delta Corp and Gulf Keystone 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.