Correlation Between Sintana Energy and Frontera Energy

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

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

Diversification Opportunities for Sintana Energy and Frontera Energy

0.06

Correlation Coefficient

Sintana Energy  Frontera Energy

Significant diversification

The 3 months correlation between Sintana and Frontera is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and Frontera Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontera Energy Corp and Sintana Energy 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 Sintana Energy are associated (or correlated) with Frontera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontera Energy Corp has no effect on the direction of Sintana Energy i.e., Sintana Energy and Frontera Energy go up and down completely randomly.

Pair Corralation between Sintana Energy and Frontera Energy

Assuming the 90 days horizon Sintana Energy is expected to generate 2.26 times more return on investment than Frontera Energy. However, Sintana Energy is 2.26 times more volatile than Frontera Energy Corp. It trades about 0.07 of its potential returns per unit of risk. Frontera Energy Corp is currently generating about -0.03 per unit of risk. If you would invest  21.00  in Sintana Energy on December 2, 2024 and sell it today you would earn a total of  35.00  from holding Sintana Energy or generate 166.67% return on investment over 90 days.

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

Sintana Energy  vs.  Frontera Energy Corp

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.

Frontera Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Frontera Energy Corp 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.

Pair Trading with Sintana Energy and Frontera Energy

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

The idea behind Sintana Energy and Frontera Energy Corp 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 Stocks Directory module to find actively traded stocks across global markets.