Correlation Between PetroShale and Sino American

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

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

Diversification Opportunities for PetroShale and Sino American

0.0

Correlation Coefficient

PetroShale  Sino American

Pay attention - limited upside

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

Pair Corralation between PetroShale and Sino American

If you would invest  0.00  in Sino American Oil on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Sino American Oil or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

PetroShale  vs.  Sino American Oil

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.

Sino American Oil

Risk-Adjusted Performance

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.

Pair Trading with PetroShale and Sino American

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

The idea behind PetroShale and Sino American Oil 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.