Correlation Between San Leon and Prairie Provident

Can any of the company-specific risk be diversified away by investing in both San Leon and Prairie Provident 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 San Leon and Prairie Provident into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for San Leon and Prairie Provident

0.0

Correlation Coefficient

San Leon  Prairie Provident

Pay attention - limited upside

The 3 months correlation between San and Prairie is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding San Leon Energy and Prairie Provident Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prairie Provident and San Leon 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 San Leon Energy are associated (or correlated) with Prairie Provident. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prairie Provident has no effect on the direction of San Leon i.e., San Leon and Prairie Provident go up and down completely randomly.

Pair Corralation between San Leon and Prairie Provident

If you would invest  1.06  in Prairie Provident Resources on December 29, 2024 and sell it today you would earn a total of  1.46  from holding Prairie Provident Resources or generate 137.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	92.19%
Values	Daily Returns

San Leon Energy  vs.  Prairie Provident Resources

San Leon Energy

Risk-Adjusted Performance

Very Weak

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

Prairie Provident

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prairie Provident Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prairie Provident reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with San Leon and Prairie Provident

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

The idea behind San Leon Energy and Prairie Provident Resources 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.