Correlation Between Frontera Energy and Sintana Energy

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

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

Diversification Opportunities for Frontera Energy and Sintana Energy

0.47

Correlation Coefficient

Frontera Energy  Sintana Energy

Very weak diversification

The 3 months correlation between Frontera and Sintana is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Frontera Energy Corp and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy and Frontera Energy 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 Frontera Energy Corp are associated (or correlated) with Sintana Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sintana Energy has no effect on the direction of Frontera Energy i.e., Frontera Energy and Sintana Energy go up and down completely randomly.

Pair Corralation between Frontera Energy and Sintana Energy

Assuming the 90 days horizon Frontera Energy Corp is expected to under-perform the Sintana Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Frontera Energy Corp is 2.11 times less risky than Sintana Energy. The pink sheet trades about -0.06 of its potential returns per unit of risk. The Sintana Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Sintana Energy on September 12, 2024 and sell it today you would earn a total of  2.00  from holding Sintana Energy or generate 2.63% return on investment over 90 days.

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

Frontera Energy Corp  vs.  Sintana Energy

Frontera Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontera Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sintana Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sintana Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sintana Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Frontera Energy and Sintana Energy

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

The idea behind Frontera Energy Corp and Sintana Energy 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.