Correlation Between InPlay Oil and PetroShale
Can any of the company-specific risk be diversified away by investing in both InPlay Oil and PetroShale 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 InPlay Oil and PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and PetroShale, you can compare the effects of market volatilities on InPlay Oil and PetroShale 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 InPlay Oil with a short position of PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and PetroShale.
Diversification Opportunities for InPlay Oil and PetroShale
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between InPlay and PetroShale is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale and InPlay Oil 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 InPlay Oil Corp are associated (or correlated) with PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of InPlay Oil i.e., InPlay Oil and PetroShale go up and down completely randomly.
Pair Corralation between InPlay Oil and PetroShale
Assuming the 90 days horizon InPlay Oil Corp is expected to under-perform the PetroShale. But the otc stock apears to be less risky and, when comparing its historical volatility, InPlay Oil Corp is 1.14 times less risky than PetroShale. The otc stock trades about -0.08 of its potential returns per unit of risk. The PetroShale is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 28.00 in PetroShale on December 1, 2024 and sell it today you would earn a total of 2.00 from holding PetroShale or generate 7.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
InPlay Oil Corp vs. PetroShale
Performance |
Timeline |
InPlay Oil Corp |
PetroShale |
InPlay Oil and PetroShale Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with InPlay Oil and PetroShale
The main advantage of trading using opposite InPlay Oil and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.InPlay Oil vs. Petrus Resources | InPlay Oil vs. Hemisphere Energy | InPlay Oil vs. Headwater Exploration | InPlay Oil vs. Surge Energy |
PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale vs. Tullow Oil plc |
Check out your portfolio center.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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