Correlation Between Petro Viking and Caspian Sunrise

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

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

Diversification Opportunities for Petro Viking and Caspian Sunrise

0.2

Correlation Coefficient

Petro Viking  Caspian Sunrise

Modest diversification

The 3 months correlation between Petro and Caspian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Petro Viking Energy and Caspian Sunrise Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caspian Sunrise Plc and Petro Viking 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 Petro Viking Energy are associated (or correlated) with Caspian Sunrise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caspian Sunrise Plc has no effect on the direction of Petro Viking i.e., Petro Viking and Caspian Sunrise go up and down completely randomly.

Pair Corralation between Petro Viking and Caspian Sunrise

If you would invest  0.38  in Petro Viking Energy on September 13, 2024 and sell it today you would earn a total of  0.81  from holding Petro Viking Energy or generate 213.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	3.17%
Values	Daily Returns

Petro Viking Energy  vs.  Caspian Sunrise Plc

Petro Viking Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petro Viking Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Petro Viking reported solid returns over the last few months and may actually be approaching a breakup point.

Caspian Sunrise Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caspian Sunrise Plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Caspian Sunrise is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petro Viking and Caspian Sunrise

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

The idea behind Petro Viking Energy and Caspian Sunrise Plc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.