Correlation Between Stans Energy and Pampa Metals

Can any of the company-specific risk be diversified away by investing in both Stans Energy and Pampa Metals 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 Stans Energy and Pampa Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stans Energy Corp and Pampa Metals, you can compare the effects of market volatilities on Stans Energy and Pampa Metals 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 Stans Energy with a short position of Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stans Energy and Pampa Metals.

Diversification Opportunities for Stans Energy and Pampa Metals

-0.26

Correlation Coefficient

Stans Energy  Pampa Metals

Very good diversification

The 3 months correlation between Stans and Pampa is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Stans Energy Corp and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals and Stans Energy 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 Stans Energy Corp are associated (or correlated) with Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Stans Energy i.e., Stans Energy and Pampa Metals go up and down completely randomly.

Pair Corralation between Stans Energy and Pampa Metals

Assuming the 90 days horizon Stans Energy Corp is expected to under-perform the Pampa Metals. In addition to that, Stans Energy is 1.94 times more volatile than Pampa Metals. It trades about -0.04 of its total potential returns per unit of risk. Pampa Metals is currently generating about 0.06 per unit of volatility. If you would invest  11.00  in Pampa Metals on December 28, 2024 and sell it today you would earn a total of  1.00  from holding Pampa Metals or generate 9.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Stans Energy Corp  vs.  Pampa Metals

Stans Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stans Energy Corp 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 technical and fundamental 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.

Pampa Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pampa Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Pampa Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stans Energy and Pampa Metals

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

The idea behind Stans Energy Corp and Pampa Metals 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.