Correlation Between MMEX Resources and ShaMaran Petroleum

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

Diversification Opportunities for MMEX Resources and ShaMaran Petroleum

-0.31

Correlation Coefficient

MMEX Resources  ShaMaran Petroleum

Very good diversification

The 3 months correlation between MMEX and ShaMaran is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding MMEX Resources Corp and ShaMaran Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShaMaran Petroleum Corp 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 ShaMaran Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShaMaran Petroleum Corp has no effect on the direction of MMEX Resources i.e., MMEX Resources and ShaMaran Petroleum go up and down completely randomly.

Pair Corralation between MMEX Resources and ShaMaran Petroleum

Given the investment horizon of 90 days MMEX Resources Corp is expected to generate 44.97 times more return on investment than ShaMaran Petroleum. However, MMEX Resources is 44.97 times more volatile than ShaMaran Petroleum Corp. It trades about 0.26 of its potential returns per unit of risk. ShaMaran Petroleum Corp is currently generating about 0.23 per unit of risk. If you would invest  0.02  in MMEX Resources Corp on December 29, 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 Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

MMEX Resources Corp  vs.  ShaMaran Petroleum Corp

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 20 (%) 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.

ShaMaran Petroleum Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ShaMaran Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MMEX Resources and ShaMaran Petroleum

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

The idea behind MMEX Resources Corp and ShaMaran Petroleum 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.