Correlation Between Kelt Exploration and Athabasca Oil

Can any of the company-specific risk be diversified away by investing in both Kelt Exploration and Athabasca 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 Kelt Exploration and Athabasca Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Kelt Exploration and Athabasca Oil

0.61

Correlation Coefficient

Kelt Exploration  Athabasca Oil

Poor diversification

The 3 months correlation between Kelt and Athabasca is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kelt Exploration and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil Corp and Kelt Exploration 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 Kelt Exploration are associated (or correlated) with Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of Kelt Exploration i.e., Kelt Exploration and Athabasca Oil go up and down completely randomly.

Pair Corralation between Kelt Exploration and Athabasca Oil

Assuming the 90 days horizon Kelt Exploration is expected to generate 11.32 times less return on investment than Athabasca Oil. In addition to that, Kelt Exploration is 1.06 times more volatile than Athabasca Oil Corp. It trades about 0.0 of its total potential returns per unit of risk. Athabasca Oil Corp is currently generating about 0.06 per unit of volatility. If you would invest  359.00  in Athabasca Oil Corp on December 29, 2024 and sell it today you would earn a total of  26.00  from holding Athabasca Oil Corp or generate 7.24% return on investment over 90 days.

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

Kelt Exploration  vs.  Athabasca Oil Corp

Kelt Exploration

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kelt Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kelt Exploration is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Athabasca Oil Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Athabasca Oil Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Athabasca Oil may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kelt Exploration and Athabasca Oil

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

The idea behind Kelt Exploration and Athabasca Oil 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.