Correlation Between MMEX Resources and Petro Viking

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

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

Diversification Opportunities for MMEX Resources and Petro Viking

0.14

Correlation Coefficient

MMEX Resources  Petro Viking

Average diversification

The 3 months correlation between MMEX and Petro is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding MMEX Resources Corp and Petro Viking Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Viking Energy and MMEX Resources 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 MMEX Resources Corp are associated (or correlated) with Petro Viking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Viking Energy has no effect on the direction of MMEX Resources i.e., MMEX Resources and Petro Viking go up and down completely randomly.

Pair Corralation between MMEX Resources and Petro Viking

Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 3.64 times more return on investment than Petro Viking. However, MMEX Resources is 3.64 times more volatile than Petro Viking Energy. It trades about 0.23 of its potential returns per unit of risk. Petro Viking Energy is currently generating about 0.14 per unit of risk. If you would invest  0.02  in MMEX Resources Corp on December 27, 2024 and sell it today you would lose (0.01) from holding MMEX Resources Corp or give up 50.0% of portfolio value over 90 days.

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

MMEX Resources Corp  vs.  Petro Viking Energy

MMEX Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MMEX Resources Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, MMEX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Petro Viking Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Viking Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Petro Viking reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MMEX Resources and Petro Viking

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

The idea behind MMEX Resources Corp and Petro Viking Energy 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.