Correlation Between Oil Natural and Summit Securities

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

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

Diversification Opportunities for Oil Natural and Summit Securities

-0.45

Correlation Coefficient

Oil Natural  Summit Securities

Very good diversification

The 3 months correlation between Oil and Summit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Summit Securities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Securities and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Summit Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Securities has no effect on the direction of Oil Natural i.e., Oil Natural and Summit Securities go up and down completely randomly.

Pair Corralation between Oil Natural and Summit Securities

Assuming the 90 days trading horizon Oil Natural Gas is expected to generate 0.77 times more return on investment than Summit Securities. However, Oil Natural Gas is 1.3 times less risky than Summit Securities. It trades about -0.04 of its potential returns per unit of risk. Summit Securities Limited is currently generating about -0.26 per unit of risk. If you would invest  25,890  in Oil Natural Gas on October 9, 2024 and sell it today you would lose (454.00) from holding Oil Natural Gas or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Oil Natural Gas  vs.  Summit Securities Limited

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Summit Securities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Securities Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Summit Securities unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oil Natural and Summit Securities

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

The idea behind Oil Natural Gas and Summit Securities 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.