Correlation Between Sky Petroleum and Kiwetinohk Energy

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

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

Diversification Opportunities for Sky Petroleum and Kiwetinohk Energy

-0.41

Correlation Coefficient

Sky Petroleum  Kiwetinohk Energy

Very good diversification

The 3 months correlation between Sky and Kiwetinohk is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sky Petroleum and Kiwetinohk Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiwetinohk Energy Corp and Sky 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 Sky Petroleum are associated (or correlated) with Kiwetinohk Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiwetinohk Energy Corp has no effect on the direction of Sky Petroleum i.e., Sky Petroleum and Kiwetinohk Energy go up and down completely randomly.

Pair Corralation between Sky Petroleum and Kiwetinohk Energy

Given the investment horizon of 90 days Sky Petroleum is expected to generate 94.16 times more return on investment than Kiwetinohk Energy. However, Sky Petroleum is 94.16 times more volatile than Kiwetinohk Energy Corp. It trades about 0.13 of its potential returns per unit of risk. Kiwetinohk Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  0.02  in Sky Petroleum on December 19, 2024 and sell it today you would earn a total of  9.98  from holding Sky Petroleum or generate 49900.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Sky Petroleum  vs.  Kiwetinohk Energy Corp

Sky Petroleum

Risk-Adjusted Performance

OK

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

Kiwetinohk Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kiwetinohk Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Kiwetinohk Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Sky Petroleum and Kiwetinohk Energy

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

The idea behind Sky Petroleum and Kiwetinohk Energy Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.