Correlation Between Caspian Sunrise and SDX Energy

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

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

Diversification Opportunities for Caspian Sunrise and SDX Energy

0.0

Correlation Coefficient

Caspian Sunrise  SDX Energy

Pay attention - limited upside

The 3 months correlation between Caspian and SDX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Caspian Sunrise Plc and SDX Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SDX Energy plc and Caspian Sunrise 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 Caspian Sunrise Plc are associated (or correlated) with SDX Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SDX Energy plc has no effect on the direction of Caspian Sunrise i.e., Caspian Sunrise and SDX Energy go up and down completely randomly.

Pair Corralation between Caspian Sunrise and SDX Energy

If you would invest  0.46  in SDX Energy plc on December 28, 2024 and sell it today you would earn a total of  0.96  from holding SDX Energy plc or generate 208.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Caspian Sunrise Plc  vs.  SDX Energy plc

Caspian Sunrise Plc

Risk-Adjusted Performance

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.

SDX Energy plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SDX Energy plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, SDX Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caspian Sunrise and SDX Energy

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

The idea behind Caspian Sunrise Plc and SDX Energy 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.