Correlation Between Royal Helium and Sintana Energy

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

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

Diversification Opportunities for Royal Helium and Sintana Energy

0.82

Correlation Coefficient

Royal Helium  Sintana Energy

Very poor diversification

The 3 months correlation between Royal and Sintana is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Royal Helium and Sintana Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sintana Energy and Royal Helium 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 Royal Helium 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 Royal Helium i.e., Royal Helium and Sintana Energy go up and down completely randomly.

Pair Corralation between Royal Helium and Sintana Energy

Assuming the 90 days horizon Royal Helium is expected to generate 0.93 times more return on investment than Sintana Energy. However, Royal Helium is 1.08 times less risky than Sintana Energy. It trades about -0.14 of its potential returns per unit of risk. Sintana Energy is currently generating about -0.13 per unit of risk. If you would invest  2.20  in Royal Helium on December 20, 2024 and sell it today you would lose (0.80) from holding Royal Helium or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Royal Helium  vs.  Sintana Energy

Royal Helium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royal Helium 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 fundamental 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.

Sintana Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sintana Energy 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 Royal Helium and Sintana Energy

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

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.