Correlation Between Kosmos Energy and CNX Resources

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

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

Diversification Opportunities for Kosmos Energy and CNX Resources

0.47

Correlation Coefficient

Kosmos Energy  CNX Resources

Very weak diversification

The 3 months correlation between Kosmos and CNX is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kosmos Energy and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and Kosmos 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 Kosmos Energy are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Kosmos Energy i.e., Kosmos Energy and CNX Resources go up and down completely randomly.

Pair Corralation between Kosmos Energy and CNX Resources

Considering the 90-day investment horizon Kosmos Energy is expected to under-perform the CNX Resources. In addition to that, Kosmos Energy is 1.65 times more volatile than CNX Resources Corp. It trades about -0.04 of its total potential returns per unit of risk. CNX Resources Corp is currently generating about 0.08 per unit of volatility. If you would invest  1,535  in CNX Resources Corp on November 19, 2024 and sell it today you would earn a total of  1,484  from holding CNX Resources Corp or generate 96.68% return on investment over 90 days.

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

Kosmos Energy  vs.  CNX Resources Corp

Kosmos Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kosmos Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CNX Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kosmos Energy and CNX Resources

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

The idea behind Kosmos Energy and CNX Resources 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.