Correlation Between Stamper Oil and Spindletop

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

By analyzing existing cross correlation between Stamper Oil Gas and Spindletop OG, you can compare the effects of market volatilities on Stamper Oil and Spindletop 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 Stamper Oil with a short position of Spindletop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stamper Oil and Spindletop.

Diversification Opportunities for Stamper Oil and Spindletop

0.27

Correlation Coefficient

Stamper Oil  Spindletop

Modest diversification

The 3 months correlation between Stamper and Spindletop is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Stamper Oil Gas and Spindletop OG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spindletop OG and Stamper Oil 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 Stamper Oil Gas are associated (or correlated) with Spindletop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spindletop OG has no effect on the direction of Stamper Oil i.e., Stamper Oil and Spindletop go up and down completely randomly.

Pair Corralation between Stamper Oil and Spindletop

Assuming the 90 days horizon Stamper Oil Gas is expected to generate 12.93 times more return on investment than Spindletop. However, Stamper Oil is 12.93 times more volatile than Spindletop OG. It trades about 0.07 of its potential returns per unit of risk. Spindletop OG is currently generating about 0.0 per unit of risk. If you would invest  23.00  in Stamper Oil Gas on September 23, 2024 and sell it today you would lose (22.00) from holding Stamper Oil Gas or give up 95.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Stamper Oil Gas  vs.  Spindletop OG

Stamper Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

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

Spindletop OG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spindletop OG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Stamper Oil and Spindletop

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

The idea behind Stamper Oil Gas and Spindletop OG 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.