Correlation Between PetroShale and Sintana Energy

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

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

Diversification Opportunities for PetroShale and Sintana Energy

0.44

Correlation Coefficient

PetroShale  Sintana Energy

Very weak diversification

The 3 months correlation between PetroShale and Sintana is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PetroShale and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy 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 Sintana Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sintana Energy has no effect on the direction of PetroShale i.e., PetroShale and Sintana Energy go up and down completely randomly.

Pair Corralation between PetroShale and Sintana Energy

Assuming the 90 days horizon PetroShale is expected to under-perform the Sintana Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroShale is 2.01 times less risky than Sintana Energy. The otc stock trades about 0.0 of its potential returns per unit of risk. The Sintana Energy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.30  in Sintana Energy on October 7, 2024 and sell it today you would earn a total of  66.70  from holding Sintana Energy or generate 913.7% return on investment over 90 days.

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

PetroShale  vs.  Sintana Energy

PetroShale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroShale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sintana Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sintana Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PetroShale and Sintana Energy

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

The idea behind PetroShale and Sintana Energy 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.