Correlation Between PetroShale and Condor Petroleum

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

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

Diversification Opportunities for PetroShale and Condor Petroleum

-0.09

Correlation Coefficient

PetroShale  Condor Petroleum

Good diversification

The 3 months correlation between PetroShale and Condor is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Condor Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Condor Petroleum and PetroShale 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 PetroShale are associated (or correlated) with Condor Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Condor Petroleum has no effect on the direction of PetroShale i.e., PetroShale and Condor Petroleum go up and down completely randomly.

Pair Corralation between PetroShale and Condor Petroleum

Assuming the 90 days horizon PetroShale is expected to under-perform the Condor Petroleum. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 1.21 times less risky than Condor Petroleum. The otc stock trades about -0.02 of its potential returns per unit of risk. The Condor Petroleum is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  128.00  in Condor Petroleum on December 30, 2024 and sell it today you would lose (6.00) from holding Condor Petroleum or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.42%
Values	Daily Returns

PetroShale  vs.  Condor Petroleum

PetroShale

Risk-Adjusted Performance

Very Weak

Over the last 90 days PetroShale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, PetroShale is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Condor Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Condor Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Condor Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PetroShale and Condor Petroleum

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

The idea behind PetroShale and Condor Petroleum 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.