Correlation Between Sino American and Pantheon Resources

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

By analyzing existing cross correlation between Sino American Oil and Pantheon Resources Plc, you can compare the effects of market volatilities on Sino American and Pantheon 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 Sino American with a short position of Pantheon Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sino American and Pantheon Resources.

Diversification Opportunities for Sino American and Pantheon Resources

0.0

Correlation Coefficient

Sino American  Pantheon Resources

Pay attention - limited upside

The 3 months correlation between Sino and Pantheon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sino American Oil and Pantheon Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pantheon Resources Plc and Sino American 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 Sino American Oil are associated (or correlated) with Pantheon Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pantheon Resources Plc has no effect on the direction of Sino American i.e., Sino American and Pantheon Resources go up and down completely randomly.

Pair Corralation between Sino American and Pantheon Resources

Given the investment horizon of 90 days Sino American Oil is expected to generate 7.16 times more return on investment than Pantheon Resources. However, Sino American is 7.16 times more volatile than Pantheon Resources Plc. It trades about 0.05 of its potential returns per unit of risk. Pantheon Resources Plc is currently generating about 0.07 per unit of risk. If you would invest  20.00  in Sino American Oil on September 12, 2024 and sell it today you would lose (20.00) from holding Sino American Oil or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sino American Oil  vs.  Pantheon Resources Plc

Sino American Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sino American Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Sino American is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pantheon Resources Plc

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Sino American and Pantheon Resources

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

The idea behind Sino American Oil and Pantheon Resources Plc 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.