Correlation Between GIB Capital and XCana Petroleum

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

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

Diversification Opportunities for GIB Capital and XCana Petroleum

-0.74

Correlation Coefficient

GIB Capital  XCana Petroleum

Pay attention - limited upside

The 3 months correlation between GIB and XCana is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding GIB Capital Group and XCana Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCana Petroleum and GIB Capital 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 GIB Capital Group are associated (or correlated) with XCana Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCana Petroleum has no effect on the direction of GIB Capital i.e., GIB Capital and XCana Petroleum go up and down completely randomly.

Pair Corralation between GIB Capital and XCana Petroleum

Given the investment horizon of 90 days GIB Capital Group is expected to under-perform the XCana Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, GIB Capital Group is 2.82 times less risky than XCana Petroleum. The pink sheet trades about -0.13 of its potential returns per unit of risk. The XCana Petroleum is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4.10  in XCana Petroleum on December 19, 2024 and sell it today you would earn a total of  6.90  from holding XCana Petroleum or generate 168.29% return on investment over 90 days.

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

GIB Capital Group  vs.  XCana Petroleum

GIB Capital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days GIB Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

XCana Petroleum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XCana Petroleum are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, XCana Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GIB Capital and XCana Petroleum

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

The idea behind GIB Capital Group and XCana 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.