Correlation Between Sintana Energy and PetroTal Corp

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

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

Diversification Opportunities for Sintana Energy and PetroTal Corp

0.41

Correlation Coefficient

Sintana Energy  PetroTal Corp

Very weak diversification

The 3 months correlation between Sintana and PetroTal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and PetroTal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroTal 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 PetroTal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroTal Corp has no effect on the direction of Sintana Energy i.e., Sintana Energy and PetroTal Corp go up and down completely randomly.

Pair Corralation between Sintana Energy and PetroTal Corp

Assuming the 90 days horizon Sintana Energy is expected to generate 1.97 times more return on investment than PetroTal Corp. However, Sintana Energy is 1.97 times more volatile than PetroTal Corp. It trades about -0.01 of its potential returns per unit of risk. PetroTal Corp is currently generating about -0.08 per unit of risk. If you would invest  79.00  in Sintana Energy on September 13, 2024 and sell it today you would lose (5.00) from holding Sintana Energy or give up 6.33% of portfolio value over 90 days.

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

Sintana Energy  vs.  PetroTal Corp

Sintana Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

PetroTal Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroTal Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Sintana Energy and PetroTal Corp

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

The idea behind Sintana Energy and PetroTal 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.