Correlation Between Gulf Keystone and Saturn Oil

Can any of the company-specific risk be diversified away by investing in both Gulf Keystone and Saturn Oil 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 Saturn Oil 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 Saturn Oil Gas, you can compare the effects of market volatilities on Gulf Keystone and Saturn Oil 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 Saturn Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gulf Keystone and Saturn Oil.

Diversification Opportunities for Gulf Keystone and Saturn Oil

-0.72

Correlation Coefficient

Gulf Keystone  Saturn Oil

Pay attention - limited upside

The 3 months correlation between Gulf and Saturn is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Keystone Petroleum and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas 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 Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Gulf Keystone i.e., Gulf Keystone and Saturn Oil go up and down completely randomly.

Pair Corralation between Gulf Keystone and Saturn Oil

Assuming the 90 days horizon Gulf Keystone Petroleum is expected to under-perform the Saturn Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gulf Keystone Petroleum is 1.05 times less risky than Saturn Oil. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Saturn Oil Gas is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Saturn Oil Gas on September 18, 2024 and sell it today you would lose (3.00) from holding Saturn Oil Gas or give up 1.97% of portfolio value over 90 days.

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

Gulf Keystone Petroleum  vs.  Saturn Oil Gas

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.

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas 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 Saturn Oil

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

The idea behind Gulf Keystone Petroleum and Saturn Oil Gas 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.