Correlation Between ShaMaran Petroleum and Freemelt Holding

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

Diversification Opportunities for ShaMaran Petroleum and Freemelt Holding

-0.6

Correlation Coefficient

ShaMaran Petroleum  Freemelt Holding

Excellent diversification

The 3 months correlation between ShaMaran and Freemelt is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Freemelt Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freemelt Holding 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 Freemelt Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freemelt Holding has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Freemelt Holding go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Freemelt Holding

Assuming the 90 days trading horizon ShaMaran Petroleum Corp is expected to generate 0.36 times more return on investment than Freemelt Holding. However, ShaMaran Petroleum Corp is 2.82 times less risky than Freemelt Holding. It trades about 0.27 of its potential returns per unit of risk. Freemelt Holding AB is currently generating about -0.12 per unit of risk. If you would invest  54.00  in ShaMaran Petroleum Corp on September 26, 2024 and sell it today you would earn a total of  35.00  from holding ShaMaran Petroleum Corp or generate 64.81% return on investment over 90 days.

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

ShaMaran Petroleum Corp  vs.  Freemelt Holding AB

ShaMaran Petroleum Corp

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, ShaMaran Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Freemelt Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freemelt Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ShaMaran Petroleum and Freemelt Holding

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

The idea behind ShaMaran Petroleum Corp and Freemelt Holding AB 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.