Correlation Between YPF Sociedad and Athabasca Oil

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

By analyzing existing cross correlation between YPF Sociedad Anonima and Athabasca Oil Corp, you can compare the effects of market volatilities on YPF Sociedad and Athabasca 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 YPF Sociedad with a short position of Athabasca Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of YPF Sociedad and Athabasca Oil.

Diversification Opportunities for YPF Sociedad and Athabasca Oil

0.2

Correlation Coefficient

YPF Sociedad  Athabasca Oil

Modest diversification

The 3 months correlation between YPF and Athabasca is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and Athabasca Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Athabasca Oil Corp and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with Athabasca Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Athabasca Oil Corp has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and Athabasca Oil go up and down completely randomly.

Pair Corralation between YPF Sociedad and Athabasca Oil

Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 1.44 times more return on investment than Athabasca Oil. However, YPF Sociedad is 1.44 times more volatile than Athabasca Oil Corp. It trades about 0.08 of its potential returns per unit of risk. Athabasca Oil Corp is currently generating about 0.05 per unit of risk. If you would invest  1,210  in YPF Sociedad Anonima on November 20, 2024 and sell it today you would earn a total of  2,512  from holding YPF Sociedad Anonima or generate 207.6% return on investment over 90 days.

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

YPF Sociedad Anonima  vs.  Athabasca Oil Corp

YPF Sociedad Anonima

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in YPF Sociedad Anonima are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, YPF Sociedad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Athabasca Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Athabasca Oil Corp 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 YPF Sociedad and Athabasca Oil

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

The idea behind YPF Sociedad Anonima and Athabasca Oil Corp 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.