Correlation Between Gulf Keystone and Sintana Energy

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

Diversification Opportunities for Gulf Keystone and Sintana Energy

-0.81

Correlation Coefficient

Gulf Keystone  Sintana Energy

Pay attention - limited upside

The 3 months correlation between Gulf and Sintana is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gulf Keystone Petroleum and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy 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 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 Gulf Keystone i.e., Gulf Keystone and Sintana Energy go up and down completely randomly.

Pair Corralation between Gulf Keystone and Sintana Energy

Assuming the 90 days horizon Gulf Keystone Petroleum is expected to generate 0.91 times more return on investment than Sintana Energy. However, Gulf Keystone Petroleum is 1.1 times less risky than Sintana Energy. It trades about 0.18 of its potential returns per unit of risk. Sintana Energy is currently generating about -0.16 per unit of risk. If you would invest  175.00  in Gulf Keystone Petroleum on December 27, 2024 and sell it today you would earn a total of  87.00  from holding Gulf Keystone Petroleum or generate 49.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.16%
Values	Daily Returns

Gulf Keystone Petroleum  vs.  Sintana Energy

Gulf Keystone Petroleum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Keystone Petroleum are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gulf Keystone reported solid returns over the last few months and may actually be approaching a breakup point.

Sintana Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sintana Energy 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 Gulf Keystone and Sintana Energy

The main advantage of trading using opposite Gulf Keystone and Sintana Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gulf Keystone 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 Gulf Keystone Petroleum 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..