Correlation Between Valeura Energy and Saturn Oil

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

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

Diversification Opportunities for Valeura Energy and Saturn Oil

-0.44

Correlation Coefficient

Valeura Energy  Saturn Oil

Very good diversification

The 3 months correlation between Valeura and Saturn is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Saturn Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saturn Oil Gas and Valeura 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 Valeura Energy are associated (or correlated) with Saturn Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saturn Oil Gas has no effect on the direction of Valeura Energy i.e., Valeura Energy and Saturn Oil go up and down completely randomly.

Pair Corralation between Valeura Energy and Saturn Oil

Assuming the 90 days horizon Valeura Energy is expected to generate 1.56 times more return on investment than Saturn Oil. However, Valeura Energy is 1.56 times more volatile than Saturn Oil Gas. It trades about 0.12 of its potential returns per unit of risk. Saturn Oil Gas is currently generating about -0.06 per unit of risk. If you would invest  380.00  in Valeura Energy on October 20, 2024 and sell it today you would earn a total of  175.00  from holding Valeura Energy or generate 46.05% return on investment over 90 days.

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

Valeura Energy  vs.  Saturn Oil Gas

Valeura Energy

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Saturn Oil Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saturn Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Valeura Energy and Saturn Oil

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

The idea behind Valeura Energy and Saturn 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.