Correlation Between ShaMaran Petroleum and Coelacanth Energy

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

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

Diversification Opportunities for ShaMaran Petroleum and Coelacanth Energy

0.42

Correlation Coefficient

ShaMaran Petroleum  Coelacanth Energy

Very weak diversification

The 3 months correlation between ShaMaran and Coelacanth is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Coelacanth Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coelacanth Energy and ShaMaran Petroleum 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 ShaMaran Petroleum Corp are associated (or correlated) with Coelacanth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coelacanth Energy has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Coelacanth Energy go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Coelacanth Energy

Assuming the 90 days horizon ShaMaran Petroleum Corp is expected to generate 2.13 times more return on investment than Coelacanth Energy. However, ShaMaran Petroleum is 2.13 times more volatile than Coelacanth Energy. It trades about 0.23 of its potential returns per unit of risk. Coelacanth Energy is currently generating about 0.06 per unit of risk. If you would invest  8.00  in ShaMaran Petroleum Corp on December 24, 2024 and sell it today you would earn a total of  9.00  from holding ShaMaran Petroleum Corp or generate 112.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

ShaMaran Petroleum Corp  vs.  Coelacanth Energy

ShaMaran Petroleum Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ShaMaran Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Coelacanth Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Coelacanth Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Coelacanth Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ShaMaran Petroleum and Coelacanth Energy

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

The idea behind ShaMaran Petroleum Corp and Coelacanth 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.

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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.