Correlation Between ShaMaran Petroleum and MMEX Resources
Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum and MMEX Resources 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 MMEX Resources 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 MMEX Resources Corp, you can compare the effects of market volatilities on ShaMaran Petroleum and MMEX Resources 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 MMEX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and MMEX Resources.
Diversification Opportunities for ShaMaran Petroleum and MMEX Resources
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between ShaMaran and MMEX is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and MMEX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMEX Resources Corp 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 MMEX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMEX Resources Corp has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and MMEX Resources go up and down completely randomly.
Pair Corralation between ShaMaran Petroleum and MMEX Resources
Assuming the 90 days horizon ShaMaran Petroleum is expected to generate 80.8 times less return on investment than MMEX Resources. But when comparing it to its historical volatility, ShaMaran Petroleum Corp is 21.33 times less risky than MMEX Resources. It trades about 0.06 of its potential returns per unit of risk. MMEX Resources Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2.60 in MMEX Resources Corp on September 2, 2024 and sell it today you would lose (2.59) from holding MMEX Resources Corp or give up 99.62% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
ShaMaran Petroleum Corp vs. MMEX Resources Corp
Performance |
Timeline |
ShaMaran Petroleum Corp |
MMEX Resources Corp |
ShaMaran Petroleum and MMEX Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ShaMaran Petroleum and MMEX Resources
The main advantage of trading using opposite ShaMaran Petroleum and MMEX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum position performs unexpectedly, MMEX Resources 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 MMEX Resources will offset losses from the drop in MMEX Resources' long position.ShaMaran Petroleum vs. PetroShale | ShaMaran Petroleum vs. Africa Energy Corp | ShaMaran Petroleum vs. Horizon Oil Limited | ShaMaran Petroleum vs. Saturn Oil Gas |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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