Correlation Between ShaMaran Petroleum and Novotek AB

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

Diversification Opportunities for ShaMaran Petroleum and Novotek AB

0.91

Correlation Coefficient

ShaMaran Petroleum  Novotek AB

Almost no diversification

The 3 months correlation between ShaMaran and Novotek is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Novotek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novotek AB 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 Novotek AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novotek AB has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Novotek AB go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Novotek AB

Assuming the 90 days trading horizon ShaMaran Petroleum Corp is expected to generate 1.23 times more return on investment than Novotek AB. However, ShaMaran Petroleum is 1.23 times more volatile than Novotek AB. It trades about 0.08 of its potential returns per unit of risk. Novotek AB is currently generating about 0.03 per unit of risk. If you would invest  70.00  in ShaMaran Petroleum Corp on September 28, 2024 and sell it today you would earn a total of  22.00  from holding ShaMaran Petroleum Corp or generate 31.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.32%
Values	Daily Returns

ShaMaran Petroleum Corp  vs.  Novotek AB

ShaMaran Petroleum Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 22 (%) 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.

Novotek AB

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novotek AB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Novotek AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ShaMaran Petroleum and Novotek AB

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

The idea behind ShaMaran Petroleum Corp and Novotek 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..