Correlation Between Eni SPA and ShaMaran Petroleum

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

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

Diversification Opportunities for Eni SPA and ShaMaran Petroleum

-0.86

Correlation Coefficient

Eni SPA  ShaMaran Petroleum

Pay attention - limited upside

The 3 months correlation between Eni and ShaMaran is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eni SpA ADR and ShaMaran Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShaMaran Petroleum Corp and Eni SPA 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 Eni SpA ADR are associated (or correlated) with ShaMaran Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShaMaran Petroleum Corp has no effect on the direction of Eni SPA i.e., Eni SPA and ShaMaran Petroleum go up and down completely randomly.

Pair Corralation between Eni SPA and ShaMaran Petroleum

Taking into account the 90-day investment horizon Eni SPA is expected to generate 1760.88 times less return on investment than ShaMaran Petroleum. But when comparing it to its historical volatility, Eni SpA ADR is 5.89 times less risky than ShaMaran Petroleum. It trades about 0.0 of its potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  7.00  in ShaMaran Petroleum Corp on October 10, 2024 and sell it today you would earn a total of  2.00  from holding ShaMaran Petroleum Corp or generate 28.57% return on investment over 90 days.

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

Eni SpA ADR  vs.  ShaMaran Petroleum Corp

Eni SpA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eni SpA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ShaMaran Petroleum Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ShaMaran Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eni SPA and ShaMaran Petroleum

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

The idea behind Eni SpA ADR and ShaMaran Petroleum Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.