Correlation Between ShaMaran Petroleum and Pierce Group

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

Diversification Opportunities for ShaMaran Petroleum and Pierce Group

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between ShaMaran and Pierce is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Pierce Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pierce Group 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 Pierce Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pierce Group AB has no effect on the direction of ShaMaran Petroleum i.e., ShaMaran Petroleum and Pierce Group go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Pierce Group

Assuming the 90 days trading horizon ShaMaran Petroleum Corp is expected to generate 0.96 times more return on investment than Pierce Group. However, ShaMaran Petroleum Corp is 1.04 times less risky than Pierce Group. It trades about 0.11 of its potential returns per unit of risk. Pierce Group AB is currently generating about 0.0 per unit of risk. If you would invest  57.00  in ShaMaran Petroleum Corp on September 24, 2024 and sell it today you would earn a total of  32.00  from holding ShaMaran Petroleum Corp or generate 56.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ShaMaran Petroleum Corp  vs.  Pierce Group AB

 Performance 
       Timeline  
ShaMaran Petroleum Corp 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
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.
Pierce Group AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Pierce Group AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ShaMaran Petroleum and Pierce Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ShaMaran Petroleum and Pierce Group

The main advantage of trading using opposite ShaMaran Petroleum and Pierce Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum position performs unexpectedly, Pierce Group 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 Pierce Group will offset losses from the drop in Pierce Group's long position.
The idea behind ShaMaran Petroleum Corp and Pierce Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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