Correlation Between Surge Energy and Gran Tierra

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

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

Diversification Opportunities for Surge Energy and Gran Tierra

0.48

Correlation Coefficient

Surge Energy  Gran Tierra

Very weak diversification

The 3 months correlation between Surge and Gran is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Surge Energy and Gran Tierra Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gran Tierra Energy and Surge 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 Surge Energy are associated (or correlated) with Gran Tierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gran Tierra Energy has no effect on the direction of Surge Energy i.e., Surge Energy and Gran Tierra go up and down completely randomly.

Pair Corralation between Surge Energy and Gran Tierra

Assuming the 90 days trading horizon Surge Energy is expected to generate 0.66 times more return on investment than Gran Tierra. However, Surge Energy is 1.52 times less risky than Gran Tierra. It trades about 0.1 of its potential returns per unit of risk. Gran Tierra Energy is currently generating about -0.12 per unit of risk. If you would invest  554.00  in Surge Energy on December 28, 2024 and sell it today you would earn a total of  74.00  from holding Surge Energy or generate 13.36% return on investment over 90 days.

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

Surge Energy  vs.  Gran Tierra Energy

Surge Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Surge Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Gran Tierra Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gran Tierra Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Surge Energy and Gran Tierra

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

The idea behind Surge Energy and Gran Tierra Energy 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.