Correlation Between Kosmos Energy and EON Resources

Can any of the company-specific risk be diversified away by investing in both Kosmos Energy and EON 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 EON 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 EON Resources, you can compare the effects of market volatilities on Kosmos Energy and EON 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 EON Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kosmos Energy and EON Resources.

Diversification Opportunities for Kosmos Energy and EON Resources

0.76

Correlation Coefficient

Kosmos Energy  EON Resources

Poor diversification

The 3 months correlation between Kosmos and EON is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Kosmos Energy and EON Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON Resources 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 EON Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON Resources has no effect on the direction of Kosmos Energy i.e., Kosmos Energy and EON Resources go up and down completely randomly.

Pair Corralation between Kosmos Energy and EON Resources

Considering the 90-day investment horizon Kosmos Energy is expected to under-perform the EON Resources. But the stock apears to be less risky and, when comparing its historical volatility, Kosmos Energy is 2.66 times less risky than EON Resources. The stock trades about -0.13 of its potential returns per unit of risk. The EON Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  75.00  in EON Resources on December 27, 2024 and sell it today you would lose (25.00) from holding EON Resources or give up 33.33% of portfolio value over 90 days.

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

Kosmos Energy  vs.  EON Resources

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

EON Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days EON Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kosmos Energy and EON Resources

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

The idea behind Kosmos Energy and EON Resources 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.