Correlation Between ShaMaran Petroleum and Questerre Energy

Can any of the company-specific risk be diversified away by investing in both ShaMaran Petroleum and Questerre 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 Questerre 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 Questerre Energy, you can compare the effects of market volatilities on ShaMaran Petroleum and Questerre 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 Questerre Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShaMaran Petroleum and Questerre Energy.

Diversification Opportunities for ShaMaran Petroleum and Questerre Energy

0.78

Correlation Coefficient

ShaMaran Petroleum  Questerre Energy

Poor diversification

The 3 months correlation between ShaMaran and Questerre is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Questerre Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Questerre 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 Questerre Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Questerre Energy has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Questerre Energy go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Questerre Energy

Assuming the 90 days horizon ShaMaran Petroleum Corp is expected to generate 1.59 times more return on investment than Questerre Energy. However, ShaMaran Petroleum is 1.59 times more volatile than Questerre Energy. It trades about 0.21 of its potential returns per unit of risk. Questerre Energy is currently generating about 0.13 per unit of risk. If you would invest  8.00  in ShaMaran Petroleum Corp on December 30, 2024 and sell it today you would earn a total of  8.00  from holding ShaMaran Petroleum Corp or generate 100.0% return on investment over 90 days.

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

ShaMaran Petroleum Corp  vs.  Questerre 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 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ShaMaran Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Questerre Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Questerre Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Questerre Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ShaMaran Petroleum and Questerre Energy

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

The idea behind ShaMaran Petroleum Corp and Questerre 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.