Correlation Between Gulf Keystone and Spartan Delta

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

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

Diversification Opportunities for Gulf Keystone and Spartan Delta

-0.68

Correlation Coefficient

Gulf Keystone  Spartan Delta

Excellent diversification

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

Pair Corralation between Gulf Keystone and Spartan Delta

Assuming the 90 days horizon Gulf Keystone Petroleum is expected to generate 0.61 times more return on investment than Spartan Delta. However, Gulf Keystone Petroleum is 1.63 times less risky than Spartan Delta. It trades about -0.11 of its potential returns per unit of risk. Spartan Delta Corp is currently generating about -0.18 per unit of risk. 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

Gulf Keystone Petroleum  vs.  Spartan Delta Corp

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.

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.

Pair Trading with Gulf Keystone and Spartan Delta

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

The idea behind Gulf Keystone Petroleum and Spartan Delta 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.