Correlation Between Toro Energy and Stamper Oil

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

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

Diversification Opportunities for Toro Energy and Stamper Oil

-0.58

Correlation Coefficient

Toro Energy  Stamper Oil

Excellent diversification

The 3 months correlation between Toro and Stamper is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Toro Energy Limited and Stamper Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stamper Oil Gas and Toro Energy 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 Toro Energy Limited are associated (or correlated) with Stamper Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stamper Oil Gas has no effect on the direction of Toro Energy i.e., Toro Energy and Stamper Oil go up and down completely randomly.

Pair Corralation between Toro Energy and Stamper Oil

Assuming the 90 days horizon Toro Energy Limited is expected to under-perform the Stamper Oil. But the pink sheet apears to be less risky and, when comparing its historical volatility, Toro Energy Limited is 1.33 times less risky than Stamper Oil. The pink sheet trades about -0.45 of its potential returns per unit of risk. The Stamper Oil Gas is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  1.93  in Stamper Oil Gas on September 23, 2024 and sell it today you would lose (0.93) from holding Stamper Oil Gas or give up 48.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.36%
Values	Daily Returns

Toro Energy Limited  vs.  Stamper Oil Gas

Toro Energy Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toro Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Toro Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Toro Energy and Stamper Oil

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

The idea behind Toro Energy Limited and Stamper Oil Gas 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..