Correlation Between PetroShale and Saturn Oil

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

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

Diversification Opportunities for PetroShale and Saturn Oil

-0.34

Correlation Coefficient

PetroShale  Saturn Oil

Very good diversification

The 3 months correlation between PetroShale and Saturn is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas 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 Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of PetroShale i.e., PetroShale and Saturn Oil go up and down completely randomly.

Pair Corralation between PetroShale and Saturn Oil

Assuming the 90 days horizon PetroShale is expected to under-perform the Saturn Oil. In addition to that, PetroShale is 1.02 times more volatile than Saturn Oil Gas. It trades about -0.02 of its total potential returns per unit of risk. Saturn Oil Gas is currently generating about 0.0 per unit of volatility. If you would invest  146.00  in Saturn Oil Gas on December 30, 2024 and sell it today you would lose (3.00) from holding Saturn Oil Gas or give up 2.05% of portfolio value over 90 days.

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

PetroShale  vs.  Saturn Oil Gas

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.

Saturn Oil Gas

Risk-Adjusted Performance

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 nearly stable basic indicators, Saturn Oil 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 Saturn Oil

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

The idea behind PetroShale and Saturn Oil Gas 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.