Correlation Between Havsfrun Investment and ShaMaran Petroleum

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

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

Diversification Opportunities for Havsfrun Investment and ShaMaran Petroleum

0.68

Correlation Coefficient

Havsfrun Investment  ShaMaran Petroleum

Poor diversification

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

Pair Corralation between Havsfrun Investment and ShaMaran Petroleum

Assuming the 90 days trading horizon Havsfrun Investment is expected to generate 4.76 times less return on investment than ShaMaran Petroleum. But when comparing it to its historical volatility, Havsfrun Investment AB is 1.14 times less risky than ShaMaran Petroleum. It trades about 0.06 of its potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  55.00  in ShaMaran Petroleum Corp on September 23, 2024 and sell it today you would earn a total of  34.00  from holding ShaMaran Petroleum Corp or generate 61.82% return on investment over 90 days.

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

Havsfrun Investment AB  vs.  ShaMaran Petroleum Corp

Havsfrun Investment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Havsfrun Investment AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Havsfrun Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ShaMaran Petroleum Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, ShaMaran Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Havsfrun Investment and ShaMaran Petroleum

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

The idea behind Havsfrun Investment AB and ShaMaran Petroleum 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.