Correlation Between Sintana Energy and Royal Helium

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

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

Diversification Opportunities for Sintana Energy and Royal Helium

0.11

Correlation Coefficient

Sintana Energy  Royal Helium

Average diversification

The 3 months correlation between Sintana and Royal is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sintana Energy and Royal Helium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Helium 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 Royal Helium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Helium has no effect on the direction of Sintana Energy i.e., Sintana Energy and Royal Helium go up and down completely randomly.

Pair Corralation between Sintana Energy and Royal Helium

Assuming the 90 days horizon Sintana Energy is expected to under-perform the Royal Helium. But the otc stock apears to be less risky and, when comparing its historical volatility, Sintana Energy is 1.86 times less risky than Royal Helium. The otc stock trades about -0.5 of its potential returns per unit of risk. The Royal Helium is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Royal Helium on October 26, 2024 and sell it today you would lose (0.50) from holding Royal Helium or give up 26.32% of portfolio value over 90 days.

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

Sintana Energy  vs.  Royal Helium

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Royal Helium

Risk-Adjusted Performance

0 of 100

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Sintana Energy and Royal Helium

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

The idea behind Sintana Energy and Royal Helium 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.