Correlation Between Petrogress and Equinor ASA

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

By analyzing existing cross correlation between Petrogress and Equinor ASA ADR, you can compare the effects of market volatilities on Petrogress and Equinor ASA 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 Petrogress with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrogress and Equinor ASA.

Diversification Opportunities for Petrogress and Equinor ASA

0.28

Correlation Coefficient

Petrogress  Equinor ASA

Modest diversification

The 3 months correlation between Petrogress and Equinor is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petrogress and Equinor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA ADR and Petrogress 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 Petrogress are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA ADR has no effect on the direction of Petrogress i.e., Petrogress and Equinor ASA go up and down completely randomly.

Pair Corralation between Petrogress and Equinor ASA

Given the investment horizon of 90 days Petrogress is expected to generate 16.18 times more return on investment than Equinor ASA. However, Petrogress is 16.18 times more volatile than Equinor ASA ADR. It trades about 0.08 of its potential returns per unit of risk. Equinor ASA ADR is currently generating about -0.03 per unit of risk. If you would invest  0.02  in Petrogress on September 13, 2024 and sell it today you would lose (0.01) from holding Petrogress or give up 50.0% of portfolio value over 90 days.

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

Petrogress  vs.  Equinor ASA ADR

Petrogress

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrogress are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Petrogress unveiled solid returns over the last few months and may actually be approaching a breakup point.

Equinor ASA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equinor ASA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equinor ASA is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Petrogress and Equinor ASA

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

The idea behind Petrogress and Equinor ASA ADR 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.