Correlation Between Sintana Energy and Gulf Keystone

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

By analyzing existing cross correlation between Sintana Energy and Gulf Keystone Petroleum, you can compare the effects of market volatilities on Sintana Energy and Gulf Keystone 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 Gulf Keystone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sintana Energy and Gulf Keystone.

Diversification Opportunities for Sintana Energy and Gulf Keystone

-0.81

Correlation Coefficient

Sintana Energy  Gulf Keystone

Pay attention - limited upside

The 3 months correlation between Sintana and Gulf is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and Gulf Keystone Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Keystone Petroleum 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 Gulf Keystone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Keystone Petroleum has no effect on the direction of Sintana Energy i.e., Sintana Energy and Gulf Keystone go up and down completely randomly.

Pair Corralation between Sintana Energy and Gulf Keystone

Assuming the 90 days horizon Sintana Energy is expected to under-perform the Gulf Keystone. In addition to that, Sintana Energy is 1.1 times more volatile than Gulf Keystone Petroleum. It trades about -0.16 of its total potential returns per unit of risk. Gulf Keystone Petroleum is currently generating about 0.18 per unit of volatility. If you would invest  175.00  in Gulf Keystone Petroleum on December 27, 2024 and sell it today you would earn a total of  87.00  from holding Gulf Keystone Petroleum or generate 49.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.16%
Values	Daily Returns

Sintana Energy  vs.  Gulf Keystone Petroleum

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.

Gulf Keystone Petroleum

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Keystone Petroleum are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Gulf Keystone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sintana Energy and Gulf Keystone

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

The idea behind Sintana Energy and Gulf Keystone Petroleum 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.