Correlation Between Empire Petroleum and YPF Sociedad

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

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

Diversification Opportunities for Empire Petroleum and YPF Sociedad

0.35

Correlation Coefficient

Empire Petroleum  YPF Sociedad

Weak diversification

The 3 months correlation between Empire and YPF is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and YPF Sociedad Anonima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YPF Sociedad Anonima and Empire 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 Empire Petroleum Corp are associated (or correlated) with YPF Sociedad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YPF Sociedad Anonima has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and YPF Sociedad go up and down completely randomly.

Pair Corralation between Empire Petroleum and YPF Sociedad

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to generate 1.44 times more return on investment than YPF Sociedad. However, Empire Petroleum is 1.44 times more volatile than YPF Sociedad Anonima. It trades about -0.06 of its potential returns per unit of risk. YPF Sociedad Anonima is currently generating about -0.09 per unit of risk. If you would invest  735.00  in Empire Petroleum Corp on December 26, 2024 and sell it today you would lose (129.00) from holding Empire Petroleum Corp or give up 17.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Empire Petroleum Corp  vs.  YPF Sociedad Anonima

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

YPF Sociedad Anonima

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Empire Petroleum and YPF Sociedad

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

The idea behind Empire Petroleum Corp and YPF Sociedad Anonima 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 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.