Correlation Between Pantheon Resources and Reconnaissance Energy

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

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

Diversification Opportunities for Pantheon Resources and Reconnaissance Energy

-0.89

Correlation Coefficient

Pantheon Resources  Reconnaissance Energy

Pay attention - limited upside

The 3 months correlation between Pantheon and Reconnaissance is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pantheon Resources Plc and Reconnaissance Energy Africa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reconnaissance Energy and Pantheon Resources 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 Pantheon Resources Plc are associated (or correlated) with Reconnaissance Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reconnaissance Energy has no effect on the direction of Pantheon Resources i.e., Pantheon Resources and Reconnaissance Energy go up and down completely randomly.

Pair Corralation between Pantheon Resources and Reconnaissance Energy

Assuming the 90 days horizon Pantheon Resources Plc is expected to generate 0.73 times more return on investment than Reconnaissance Energy. However, Pantheon Resources Plc is 1.38 times less risky than Reconnaissance Energy. It trades about 0.31 of its potential returns per unit of risk. Reconnaissance Energy Africa is currently generating about -0.1 per unit of risk. If you would invest  34.00  in Pantheon Resources Plc on December 25, 2024 and sell it today you would earn a total of  52.00  from holding Pantheon Resources Plc or generate 152.94% return on investment over 90 days.

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

Pantheon Resources Plc  vs.  Reconnaissance Energy Africa

Pantheon Resources Plc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pantheon Resources Plc are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pantheon Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Reconnaissance Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reconnaissance Energy Africa 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Pantheon Resources and Reconnaissance Energy

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

The idea behind Pantheon Resources Plc and Reconnaissance Energy Africa 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.