Correlation Between Saturn Oil and Horizon Oil

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

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

Diversification Opportunities for Saturn Oil and Horizon Oil

-0.07

Correlation Coefficient

Saturn Oil  Horizon Oil

Good diversification

The 3 months correlation between Saturn and Horizon is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Saturn Oil Gas and Horizon Oil Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Oil Limited and Saturn Oil 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 Saturn Oil Gas are associated (or correlated) with Horizon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Oil Limited has no effect on the direction of Saturn Oil i.e., Saturn Oil and Horizon Oil go up and down completely randomly.

Pair Corralation between Saturn Oil and Horizon Oil

Assuming the 90 days horizon Saturn Oil Gas is expected to under-perform the Horizon Oil. But the otc stock apears to be less risky and, when comparing its historical volatility, Saturn Oil Gas is 3.17 times less risky than Horizon Oil. The otc stock trades about -0.12 of its potential returns per unit of risk. The Horizon Oil Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Horizon Oil Limited on September 3, 2024 and sell it today you would lose (1.00) from holding Horizon Oil Limited or give up 7.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Saturn Oil Gas  vs.  Horizon Oil Limited

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Horizon Oil Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Oil Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Horizon Oil may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Saturn Oil and Horizon Oil

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

The idea behind Saturn Oil Gas and Horizon Oil Limited 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.