Correlation Between Trio Petroleum and SFL

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

By analyzing existing cross correlation between Trio Petroleum Corp and SFL Corporation, you can compare the effects of market volatilities on Trio Petroleum and SFL 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 Trio Petroleum with a short position of SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Petroleum and SFL.

Diversification Opportunities for Trio Petroleum and SFL

0.51

Correlation Coefficient

Trio Petroleum  SFL

Very weak diversification

The 3 months correlation between Trio and SFL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Trio Petroleum Corp and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation and Trio 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 Trio Petroleum Corp are associated (or correlated) with SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Trio Petroleum i.e., Trio Petroleum and SFL go up and down completely randomly.

Pair Corralation between Trio Petroleum and SFL

Given the investment horizon of 90 days Trio Petroleum Corp is expected to generate 6.35 times more return on investment than SFL. However, Trio Petroleum is 6.35 times more volatile than SFL Corporation. It trades about 0.08 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.13 per unit of risk. If you would invest  113.00  in Trio Petroleum Corp on December 26, 2024 and sell it today you would earn a total of  25.00  from holding Trio Petroleum Corp or generate 22.12% return on investment over 90 days.

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

Trio Petroleum Corp  vs.  SFL Corp.

Trio Petroleum Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trio Petroleum Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, Trio Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

SFL Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Trio Petroleum and SFL

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

The idea behind Trio Petroleum Corp and SFL Corporation 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .