Correlation Between PetroTal Corp and Sintana Energy

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

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

Diversification Opportunities for PetroTal Corp and Sintana Energy

0.41

Correlation Coefficient

PetroTal Corp  Sintana Energy

Very weak diversification

The 3 months correlation between PetroTal and Sintana is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding PetroTal Corp and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy and PetroTal Corp 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 PetroTal Corp 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 PetroTal Corp i.e., PetroTal Corp and Sintana Energy go up and down completely randomly.

Pair Corralation between PetroTal Corp and Sintana Energy

Assuming the 90 days horizon PetroTal Corp is expected to under-perform the Sintana Energy. But the otc stock apears to be less risky and, when comparing its historical volatility, PetroTal Corp is 1.97 times less risky than Sintana Energy. The otc stock trades about -0.08 of its potential returns per unit of risk. The Sintana Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Sintana Energy on September 13, 2024 and sell it today you would lose (5.00) from holding Sintana Energy or give up 6.33% of portfolio value over 90 days.

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

PetroTal Corp  vs.  Sintana Energy

PetroTal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroTal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains 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 nearly stable basic indicators, Sintana Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PetroTal Corp and Sintana Energy

The main advantage of trading using opposite PetroTal Corp and Sintana Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroTal Corp 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 PetroTal Corp 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.